General Motors’ first post-bankruptcy challenge will be dealing with a battered supplier base including companies that are either in or close to filing for Chapter 11 protection.
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GM’s quick exit from bankruptcy brings no real relief to suppliers who have been cash-strapped for months amid plant shut-downs by GM and Chrysler, Dow Jones said.
Chrysler alone kept its plants down for almost two months during its reorganisation.
Eight major suppliers have filed for bankruptcy including, just this week, seat and interiors expert Lear, a major GM parts source.
“Supplier health will be the wild card for the next 90 days, not only for GM but all of the auto makers,” said Mike Robinet, vice president of global vehicle forecasts for CSM Worldwide, told Dow Jones.
“They are going to have to keep watch on them. If there is any good news, the quick resolution by GM and Chrysler may help to reduce the trepidation in the capital markets about the auto industry.”
The news agency said Ford sends teams of financial advisors and engineers to multiple suppliers weekly to help keep their operations running and has also provided funding to some of its suppliers including Visteon.
“I think many suppliers have adapted quite well to a difficult environment with very aggressive plans to exit bankruptcy themselves and continue to be world class suppliers,” GM CEO Fritz Henderson said on Friday. “Our biggest challenge from a supply base continues to be supporting Delphi in their emergence from bankruptcy.”
Major GM supplier American Axle is also in a difficult financial position.
