General Motors yesterday avoided a significant shutdown of its North American plants after it successfully negotiated a legal battle sparked by the bankruptcy of one its major suppliers.
Earlier this month, GM parts supplier Clark-Cutler-McDermott Co. filed for Chapter 11 bankruptcy after months of operating in the red. According to Automotive News, CCM, which has been a GM supplier for 45 years, manufactures sound deadening materials including dash insulators, wheelhouse liners, and fender insulators. CCM is the only supplier that makes these parts for the automaker, which is why a shutdown would’ve caused significant disruptions to GM’s production in North America.
“GM’s damages that would result from such a shutdown would be in the millions of dollars per plant per day,” GM’s lawyers said in a statement yesterday before the court ruling. “Further, GM would suffer loss of customer relations and goodwill as a result of its inability to deliver vehicles and replacement parts as ordered by customers.”
GM provided CCM with loans to keep the supplier going back in March, but disagreements between the two companies forced the supplier to temporarily shut down last month. CCM later announced it would file for bankruptcy. CCM, however, allowed GM to negotiate a deal allowing the automaker to obtain the supplier’s tooling and inventory. Yesterday, the U.S. Bankruptcy Court for the District of Massachusetts approved the deal, avoiding disruptions to GM’s production. GM also said it’s working with other suppliers that are able to produce the same parts to avoid a similar situation in the future.
Source: Automotive News, 2 (Subscription required)
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