FRANKFURT (Reuters) - Germany's largest union IG Metall is calling for a fund of at least 10 billion euros ($11.2 billion) to help companies that supply the auto industry to cope with a switch to electric vehicles, a top union representative said.
Half of the money would come from the government and the rest from the car manufacturers.
"We're proposing a transformation fund in the double-digit billion euro range for suppliers that are profitable and strong but have difficulties in getting capital or need particularly large funds to manage the switch to electric mobility," Frank Iwer, head of coordination and political planning at IG Metall, told WirtschaftsWoche.
Iwer, who also sits on the supervisory board of car parts supplier ZF Friedrichshafen, said the fund could make loans of six to eight years.
"The government should guarantee a basis interest rate of about 1.5 percent. But because it's mostly strong companies that are being funded the fund should generate a significant higher return and the government would no longer be on the hook," he said.
Struggling suppliers, however, might need short-term emergency funding, Iwer said.
IG Metall will make the proposal at a meeting of top car executives and leading politicians scheduled for June 24 at the Chancellery, WirtschaftsWoche said.
Germany's big automotive suppliers include Bosch and Continental.
Leoni, another supplier, said it was exploring all options to secure its future financing after posting a 132 million euro net loss in the first quarter.
Iwer also said it would be possible to restructure failing suppliers by setting up a rescue fund, similar to one that exists in Denmark, with the backing of trade unions and the government.
(Reporting by Christoph Steitz. Editing by Jane Merriman)