Supplier bankruptcy threatens GM’s production

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The financial problems of an important General Motors supplier may humper the automaker’s output in North America.

Even if the Massachusetts-based Clark-Cutler-McDermott has been a long-time partner for General Motors, the supplier filed for bankruptcy, claiming it has been losing millions of dollars in recent years, partly because the automaker has gradually started to pay for the components less and less from year to year. McDermott provides acoustic insulation, interior trim products and other parts for the automotive industry, with GM being its biggest customer. Furthermore, according to Automotive News, the Detroit-based maker has no other supplier for the parts CCM makes, a situation that is highly risky for the output rate and may cost the automaker “millions of dollars per day per plant,” GM lawyers said.

If CCM wants to sell its business, GM plans to take possession of the supplier’s tooling, equipment and inventory to make sure that production will not be hampered. A hearing will be held this week to determine the next steps. “There is a court hearing to address this issue and we anticipate no impact to GM’s supply between now and then,” GM spokesman Pat Morrissey told to Automotive News.

GM knew about CCM’s trouble, as the supplier informed the automaker earlier this year that it failed to repay a loan. But negotiations broke down later and CCM was forced to halt its plants, with GM finally getting a restraining order and providing the necessary funds to make CCM restart the output.

Via Automotive News