GM Resolves Disagreement with Bankrupt Supplier

by San Antonio Attorney

General Motors Co. revealed that the production of its North American plants will not be affected after a bankruptcy judge ruled on July 13 that its bankrupt supplier can terminate its contract with the automaker right away.

During a court hearing, GM’s attorney said it has new suppliers to produce acoustic insulation fabric and body interior trim parts for automobiles it manufactures in North America.  GM has been authorized to take its tools from the plants of Clark-Cutler-McDermott (CCM) and will obtain its available inventory.

It is still unclear when GM can retrieve the tools from CCM and move it to its new suppliers.

GM has not revealed the name of the new suppliers who have taken the job.

The Detroit automaker had stated in court documents that a disruption to its supplies could compel it to stop production in North America, which could result in millions of dollars of losses daily.

CCM stopped operating on July 8.

According to GM, CCM wanted the bankruptcy judge to permit it to cease making parts for GM, and to let use its cash to pay their workers and bills.  The request was approved by Judge Christopher J.  Panos.

CCM said that GM’s low contract price is one of the reasons why the company failed.

GM backed the supplier millions of dollars so that it can continue operating and also increased its payments for the auto parts.

In the past, automakers have been criticized for depending on one supplier to provide auto parts.  The auto industry operates in a just-in-time production, which means automakers stock few parts in assembly plants and depend on continuous deliveries.  The system addresses space problems in production plants but can be problematic when there is any glitch in the chain of supply.

Leave a Comment

Previous post:

Next post: