The big news on the automotive front this week was GM and Chrysler formally submitting their restructuring plans plans for realignment - including requests for additional TARP funds - to the Feds. Given the magnitude of the stakes and patriotic pride of these American brands, it’s no surprise to see so much ink devoted to their cause. But what about the plight of the auto suppliers, whose futures are tied so directly to the Big 3 (despite supplying foreign car makers as well), yet only garner a mention in the last paragraph of most news stories?

The auto suppliers are stuck in a holding pattern, biding their time while they wait to see how the Feds step in to help GM, Chrysler and consumers. Their trade groups, MEMA and OESA formally requested their 3 bridge financing options with the Treasury (which I described previously here). But no decision has been made on their request and in the meantime - like many other companies with critical business decisions on purchases, hiring/firing and operations - they are waiting for what could be a game changing decision to emerge from the hallowed halls of Washington.

I had the opportunity to interview Jim Frankola, our former CFO, to get his perspective on how uncertainty around the TARP and stimulus packages have delayed companies - particularly auto suppliers - from making critical decisions about their businesses:

Jim’s point, that finance executives are making minor cutbacks now while postponing the bigger decisions for a later day, reveals the delay tactics many companies are employing to buy themselves a little time.

Unfortunately, the auto suppliers can’t afford to wait for very long for a decision on their lifeline. As The Economist (who bucked the media trend and devoted some significant ink to the suppliers) reported this week, 1/3 of all MEMA member companies reported that they are already in “financial distress” and another 1/3 expect to be there by the end of the quarter.

Sure some suppliers will be able to shift course and diversify their client base. And I’m sure other mission critical suppliers will survive through the lean times with a combination of spend management, layoffs/plant closures and their sales to other auto companies. But for the most part, this troubled industry is stuck waiting for a decision that could decide the fate of thousands of jobs in the largest manufacturing sector of the US economy. Let’s hope their fate is decided soon. And given the fact that what they’re requesting is essentially Federal guarantees for their supply chain financing needs, let’s hope newfound fiscal conservatism doesn’t lead to a decision that reverberates through the automotive industry, unemployment lines and manufacturing base of the nation.

Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.