FT.com / Companies / Aerospace & Defence - European companies launch supply chain rescues

Some of Europe's largest companies are taking extraordinary measures to help out suppliers stricken by the credit crisis by offering cash to prop them up.

Groups from Daimler in cars, EADS in aerospace to Safran in defence are worried that their own financial health could be affected by a collapse of a supplier and are considering using their own liquidity to support smaller companies.

Paul Lester, chief executive of UK defence company VT Group, said he had told his top 100 suppliers that they should come to him for financial help. "If you get into financial difficulties don't delay, but come and talk to us. You are probably better talking to us than banks because banks aren't really doing their jobs right now and we can help," he said.

Daimler and BMW, the world's two largest luxury carmakers, have both hinted they could buy suppliers if they get into difficulties. Dieter Zetsche, Daimler's chief executive, said he was already helping some suppliers with cash and added "300,000 jobs were at risk in the industry" if banks continued to tighten credit.

The supply chain for many large manufacturers is coming under increasing stress as their small and mid-sized suppliers see credit becoming more expensive or even withdrawn. Several small suppliers have gone bankrupt in recent weeks, including one to VT Group and several in the retail sector.