The student news site of Marquette University

Marquette Wire

The student news site of Marquette University

Marquette Wire

The student news site of Marquette University

Marquette Wire

Milwaukee auto companies may receive funding

  • Federal stimulus money could keep Milwaukee auto suppliers afloat.
  • Stocks have gone up for both auto companies as a result.
  • Both have yet to confirm participation.

Two Milwaukee-based auto supply companies may be in line for needed federal stimulus money to ensure their survival.

The only thing delaying funding is whether it will take a cataclysmic event for the money to arrive.

Johnson Controls Inc. and Strattec Security Corp. (STRT), each based in the Milwaukee suburb of Glendale, would be two companies in line for $5 billion if one of the "big three" Detroit automakers goes under.

On more than one occasion the principals of General Motors, Ford and Daimler Chrysler have asked for additional bailout money to stay afloat.

As of yet, neither company has confirmed their participation in this new federal program announced by President Obama last Thursday. Stocks for both companies rose upon the news' release.

Obama announced the federal program while visiting an electric car research lab in Pomona, Calif. last Thursday. He also extended a hand to the companies to apply for a further $2 billion in stimulus funds for advanced battery technologies.

According to the Dow Jones Industrial Average, on March 18 JCI was trading at $9.82 per share. Wednesday, it had jumped to a high of $13.30 and closed at $12.61.

JCI makes automotive seats and batteries and is on the cutting-edge in battery development in road technology, according to the JCI Web site. It is now looking to develop a base for producing batteries in hybrids within the United States.

Steven Crane, associate professor of economics, said battery development is a substantial work in progress and any failure of one of the automakers would pose a major challenge to the growth of either of these suppliers.

"This issue is part of a debate over what's really important now or in the long term," Crane said. "Is this alternate energy initiative similar to a short need like revamping healthcare?"

He said this might be part of the immediate effort to stimulate the economy versus tackling additional issues.

Anna Timms, JCI manager of brand and corporate communications, said there are still specifics to determine, though the prospect sounds somewhat interesting.

"I know our research and development is aimed at revamping basic batteries," Timms said. "However, if GM or someone else goes belly up, that's a large hit."

Timms said the possibility of participating remains open in the future.

STRT's NASDAQ average jumped from $6.50 on March 18 to $7.50 on March 24, with a high of $7.95 on March 20. Trading on Wednesday eclipsed the previous high of $7.95 closing at $8.26 per share.

According the STRT Web site, the company focuses on automotive locks and keys. It mainly improves modular and entry systems, such as enhancing latches, ignition columns, locks and keys.

Dennis Kazmierski, vice president of marketing and sales for STRT, said he could not determine the immediate interests of the company in light of this new program.

"If it helps our bottom line, great, but we need to examine further information," Kazmierski said.

Either company losing business poses a long-term threat, Crane said.

"It's pretty likely either would take a big hit with contracts to GM," Crane said. "Both companies provide substantial amounts of supplies now."

Crane said finding batteries that last longer and have longer energy cycles is a major challenge.

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