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GM Plant Shutdown Averted after Deal with Supplier CCM


07/14/2016


GM Plant Shutdown Averted after Deal with Supplier CCM
The treat of a shut down some or all of General Motors’ North American plants was averted after a settlement was reached between GM and an insolvent Massachusetts parts supplier. The struggles of the parts supplier had caused concerns of a complete shutdown which was averted by the US automaker, the company told a U.S. bankruptcy court recently.
 
The automaker "did not anticipate any disruption" in production and it already had identified replacement suppliers for the parts, said GM spokesman Nick Richards after the hearing.
 
GM was allowed to retrieve tooling and finished parts from the supplier, Clark-Cutler-McDermott according to the judge of the case which was heard in the U.S. Bankruptcy Court in Worcester, Massachusetts and the ruling delivered on Wednesday.
 
The automaker said in an earlier court filing that the sole supplier of insulation and other sound-deadening materials to GM was CCM which is a 105-year-old supplier of acoustical materials based in Franklin, Massachusetts.
 
The entire GM production line would be thrown out of line and would cost the company tens of millions of dollars in lost production apart from throwing "tens of thousands" of employees at GM plants and other GM suppliers out of work, by the failure of CCM a leading to "catastrophic disruption" across the U.S. auto industry, GM had argued in court and outside.

For more than 50 years CCM had been supplying GM with auto parts on a regular basis and its deliveries to the automaker accounted for nearly 80 percent of CCM's business.
 
If the company was forced to continue making parts for GM, it would lose $30,000 a day, argued the lawyers for CCM. Since March, GM had been finding the lossess og CCM, the auto company had said.
 
CCM owned the basic machinery in its plants as is typical with such contracts. A variety of insulation and sound-deadening material used under carpets, in wheel liners and behind dashboards on nearly all GM vehicles made in the United States, Canada and Mexico is produced at the CCM factories. Though the basic machinery is owned by the suppliers, the special tooling installed in that machinery that was designed to make the above mentioned insulators is owned by GM.
 
While CCM would retain its basic machinery and equipment, the automaker to retrieve the special tooling and all finished parts, according to the agreement that was reached between GM and CCM.
 
It is seeking a "turn-key sale" to another company, said CCM which last week filed for Chapter 11 bankruptcy protection.
 
"Single sourcing" - contracting with just one supplier to provide critical parts for some or all of a manufacturer's vehicles for the US auto industry and its potential dangers were highlighted by the case. 
To command more attractive prices from many suppliers, along with longer contracts and common components used by more vehicles, U.S. automakers have used single sourcing.
 
(Source:www.reuters.com) 


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