Update: GM has averted a North American shutdown. Read the report here.
General Motors is likely having an emergency meeting behind closed doors right this moment. The automaker is facing a major hurdle after Clark-Cutler-McDermott Co. filed for bankruptcy. The company supplies 175 acoustic insulation and interior trim parts for every single model manufactured in North America.
According to The Detroit News, Clark-Cutler-McDermott Co. stopped producing parts for GM last Friday. However, GM was granted a temporary restraining order last month by a U.S. District judge in Detroit, forcing the supplier to temporarily resume production. The order expired yesterday, July 12, 2016.
In court documents, GM explained even a one day disruption from the supplier could force every single one of its manufacturing facilities in North America to go idle.
“A continued disruption in the supply of component parts will also cause a catastrophic disruption in the supply chain and the operations of countless GM suppliers, dealers, customers, and other stakeholders, including the potential layoff of tens of thousands of workers in the event GM’s North American operations are completely shut down,” the automaker said in court filings.
As is the norm with most modern supply chains, GM does not keep many components stockpiled away, instead relying on the just-in-time manner of operating its facilities and deliveries of components.
Clark-Cutler-McDermott filed for Chapter 11 bankruptcy last week, and is currently seeking to sell off its remaining assets after “unprofitable contracts with GM that have led it to lose $12 million since 2013.” The report states the rate of loss has accelerated this year to more than $30,000 a day.
A court hearing is scheduled for Wednesday, and GM issued a statement saying supply will not be impacted between the present and the hearing.
GM also stated in court filings that it would fund the sale of the business to a new entity.