TORONTO - An ongoing dispute over the closure of two auto parts plants in Windsor, Ont., is further proof the parts industry is on the brink and needs its own government bailout, according to the president of the Automotive Parts Manufacturers' Association.

"We're down to our last bit of money as an industry," Gerry Fedchun said. "We need some help to get through 2009."

Several parts suppliers have been forced to shut down operations in the last few months as the weak economy cuts into demand for new vehicles and the parts that go into them.

Most recently, 80 workers were laid off from the Aradco and Aramco plants, Chrysler suppliers owned by U.S.-based Catalina Precision Products, in Windsor last week.

Members of the Canadian Auto Workers union have been blockading the plants since then, saying they want fair back pay and severance.

Fedchun said closures like these could create a vicious cycle wherein assembly plants are forced to shut down because a key supplier has gone under, thus forcing other suppliers of the plants to cease operations as well.

"If the part can't be replaced the assembly plant will shut down, and then shut down everyone else who supplies the assembly plant," he said.

"We are a just-in-time system, there is no inventory lying around, so when the plant goes down everybody goes down with it within just a few days."

Fedchun said there's no doubt that more parts suppliers will go out of business unless the government provides them with immediate financial assistance, and a government bailout of General Motors and Chrysler won't trickle down fast enough.

"A lot of suppliers now need direct government assistance themselves, because even if they get paid everything they deserve from the assemblers, that's not enough money to stay open," he said, adding that the assemblers have been using fewer and fewer parts as demand for their finished products slumps.

"Suppliers can't go to their banks, the banks won't lend them any more money, so they simply don't have enough money to keep going for the next few months."

Fedchun said any government assistance would be temporary -- enough to get the suppliers through a difficult period until demand bounces back.

Many suppliers feel trapped because even if vehicles sales were to rebound today, they wouldn't have the cash on hand to buy the steel necessary to fulfil demand, he added.

"We need some cash for working capital... that's the crux of the problem," he said. "We need to get through this and the only place that can help is the government."

Fedchun said in a letter to the federal and Ontario finance ministers last October that the auto parts industry needs up to $1 billion in immediate short-term loans to help them survive the economic downturn.

Although the governments have promised billions in aid to General Motors and Chrysler, no direct aid has been forthcoming for their suppliers.

Besides the Aradco and Aramco plants, several other parts suppliers have shut down operations in recent months. Komatsu America Corp., a Japanese heavy equipment maker, has said it will close a plant south of Montreal later this year, putting 245 people out of work.

The ArvinMeritor plant in Tilbury, Ont., will shut down in June, resulting in 200 layoffs. That came on the heels of an announcement last fall that the company would shut down its 500-employee factory in Toronto, moving the work to Mexico.

Other suppliers, including Court Valve Company Inc., DDM Plastics and Magna International (TSX:MG.A) have also recently shut down Canadian plants.