* Sees bankruptcies after U.S. rejects new aid for sector
* Summer will likely be the bottom of down cycle
* Consumers will decide whether GM, Chrysler survive
By Soyoung Kim and David Bailey
DETROIT, June 17 (Reuters) - The U.S. government's decision to deny additional aid for struggling automotive suppliers will mean more bankruptcies in the cash-strapped sector, Dura Automotive Systems Chief Executive Tim Leuliette said on Wednesday.
The Obama administration, which made $5 billion available to guarantee receivables General Motors Corp and Chrysler owed suppliers earlier this year, on Tuesday rejected a request by suppliers for up to $10 billion in additional loan guarantees.
"The next 60 days are going to be very critical. Because we had summer shutdowns, it's a cash-tight period for suppliers," Leuliette told Reuters Television on the sidelines of the National Summit in Detroit.
"The absence of that money will bring bankruptcies," said Leuliette, who has been actively involved in the lobbying efforts.
He added the lack of additional assistance would likely cost the U.S. economy $15 billion to $20 billion.
Auto parts suppliers have been pushed to the brink by depressed auto sales and production shutdowns at GM and Chrysler.
Chrysler emerged from Chapter 11 bankruptcy proceedings last week by completing a sale to a group led by Italy's Fiat. GM filed for bankruptcy on June 1 and hopes to compete a sale process to another group by the end of August.
Chrysler has idled all of its U.S. production since its April 30 bankruptcy filing, adding to the supply sector troubles. But Leuliette said the automaker has started to ramp up production and added that he was seeing signs this summer would mark the bottom of the industry downturn.
"Have we hit bottom? I think the period we're going through right now will be the worst," Leuliette said.
"We're not going out to party, but we do not see it getting worse."
U.S. auto sales are down 36.5 percent through the first five months of 2009, but May sales supported by high incentives were the strongest so far in 2009, giving the beleaguered industry some hope that the selling environment is at least not deteriorating.
Leuliette said consolidation has gathered pace in the supply sector, as automaker customers turn to healthier suppliers to take over work from a number of companies failing under the economic downturn.
"We've had two situations in Europe, for example, where customers have come to us and said we have this business, there are no other suppliers. We're seeing this consolidation take place," he said.
Leuliette said the U.S. government's support for GM and Chrysler have provided the two automakers a chance to reorganize their operations but it remained to be seen whether the automakers would survive in the long term.
"The consumer will make that decision. What the government has done is to give management the tools, but not the answer," he said.
(Reporting by Soyoung Kim, David Bailey and Kevin Krolicki, editing by Dave Zimmerman)