GM Seeks to Avert U.S. Plant Shutdowns Linked to Supplier Bankruptcy
General Motors Co. says it hopes to claim equipment and inventory from a bankrupt interior trim supplier to avoid being forced to idle all 19 of its U.S. assembly plants.
Clark-Cutler-McDermott Co. filed for Chapter 11 bankruptcy protection last Thursday, claiming a money-losing contract with GM has cost it $12 million over the past three years. CCM derives 80% of its revenue from sales to GM, according to The Wall Street Journal.
On Wednesday the federal bankruptcy court in Worcester, Mass., will consider GM’s request to get the production equipment and inventory it needs from CCM to avert the plant shutdowns.
CCM contends it has no choice but to stop production. GM claims the company is using the bankruptcy process and its unique position as a single-source supplier to shirk its contractual obligations.
The Journal notes that GM recognized CCM as a supplier of the year four times in the past seven years. But the relationship has since crumbled under the pressures of higher production and lower prices, according to CCM.
The two companies had been in discussions for months about the crisis and reached a temporary deal in April. But CCM began closing plants in mid-June. GM successfully won an emergency restraining order to keep the factories operating.
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