GM gives parts supplier award, supplier promptly declares chapter 11 (vehicle, auto, buy)

[NHDave]

"Clark-Cutler-McDermott Co. stopped making acoustic insulation and trim pieces for GM vehicles on Friday after declaring Chapter 11 bankruptcy, a situation it blames on money-losing contracts signed with the automaker"

GM Faces 'Catastrophic' Assembly Disruption After Parts Supplier Goes Bankrupt

This may cause a shutdown on GM's assembly line, as the suppliers parts are in just about every U.S. vehicle GM makes.

[Tourian]

Or maybe they (GM) will just buy the company out or finance them through bankruptcy to keep them going.

[NHDave]

From what I gathered it was GM that put them in this position, paying less than cost for parts. That'll only work for so long.

[Tourian]

I guess that's pretty shrewd of them, if the supplier let it happen. They should've leveraged that with more favorable contracts with other companies.

[robr2]

Originally Posted by NHDave

From what I gathered it was GM that put them in this position, paying less than cost for parts. That'll only work for so long.

Well they're the ones that agreed to the contract.... If you search for more articles, the company relied on GM for over 80% of it's revenue - that's simply stupid in the business world.

Usually the contracts with the automakers have a provision for automaker to come in and buy the specialized equipment and tooling when the supplier has an issue. But in this case, the supplier filed for Chapter 11 and the courts won't allow a sale of the equipment until the company goes through the reorganization process.

[J.Thomas]

What the hell is going on in this country?!

[NHDave]

Originally Posted by robr2

Well they're the ones that agreed to the contract.... If you search for more articles, the company relied on GM for over 80% of it's revenue - that's simply stupid in the business world.

Usually the contracts with the automakers have a provision for automaker to come in and buy the specialized equipment and tooling when the supplier has an issue. But in this case, the supplier filed for Chapter 11 and the courts won't allow a sale of the equipment until the company goes through the reorganization process.

I thought I read that the reason they couldn't sell the equipment was because it actually belonged to GM.

[robr2]

Originally Posted by NHDave

I thought I read that the reason they couldn't sell the equipment was because it actually belonged to GM.

This article General Motors Seeking to Get Equipment From Supplier in Bankruptcy Case - WSJ says that CCM owns the equipment, tooling, and inventory.

In any case, it's moot. GM and CCM reached an agreement with the courts yesterday to for GM to buy the equipment and move it to another supplier. Hopefully, GM will have more than one supplier for these key parts this time around.

[SidewaysLS4]

Walmart business techniques applied to the auto industry...what could go wrong? I've got an idea...start a line of auto parts branded with the 'real' brand along with another brand name denoting the variant, for some real cost savings. Of course steel would need to be replaced with plaster. Cloth with garbage bag material, etc etc. But they will be real "GM Signature" parts! Might be tough to explain on the showroom floor, but with 8 year subprime financing available, I'm sure it will still sell.