Automotive

GM suppliers ponder uncertain future

Tuesday, June 02, 2009

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Matt Franklin
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MID-MICHIGAN (WJRT) -- (06/01/09)--General Motors Corp.'s bankruptcy filing is bringing more questions than answers to those who supply the automaker.

These suppliers are not the big-name ones; instead, they are the second-tier local suppliers that make small parts for GM.

Many are trying to figure out where they fit in in the bankruptcy process.

GM's stop in bankruptcy court could lead some of its suppliers down a bumpy road in the future.

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Industry watchers say don't be surprised if in the coming weeks that more suppliers could follow GM in to bankruptcy court.

That's because with many of the automaker's plants on extended summer shutdown or scheduled to be idled or closed, suppliers will have to search hard for money needed to operate.

problem for many of them will be their bankers. To what extent will the bankers allow their credit line to go, and call the loans in," said Kettering University's Andy Borchers.

In Mid-Michigan, there are already some signs of supplier trouble at GM's Flint Truck plant.

"The problem for many of them will be their bankers," Borchers said. "To what extent will the bankers allow their credit line to go and call the loans in?"

"The longer they go without producing parts, the longer they go without receiving cash. Without receiving cash, they are going to be in trouble."

A GM spokesperson said last week that the line that produces commercial trucks will start its two-week shutdown in June a week early because of a supplier issue.

"GM has got to be worried about that and find ways to help their suppliers," Borchers said. "If they are missing one part out of 2,000 or 3,000, they can't produce a truck."

Under the bankruptcy filing, GM will pay its critical suppliers first.

Suppliers are also looking to the government for additional loan money.