Oh Crap

One of GM's suppliers just went chapter 11, and it has the potential to shut down automobile assembly across General Motors:

A Massachusetts supplier that filed for bankruptcy protection last week could disrupt production at nearly every General Motors North American plant in coming days, according to documents filed in bankruptcy court.

Clark-Cutler-McDermott, based in Franklin, Mass., supplies acoustic insulation and interior trim products for automobiles, textiles and other transportation manufacturers. But GM is its largest customer and Clark-Cutler-McDermott is losing more than $30,000 a day — and more than $12 million since 2013 — partly because what GM pays for those components "usually decreases annually," CEO James McDermott stated in a court filing.

But GM has no other supplier for the parts CCM provided and any interruption in delivery of those parts would cost the automaker "millions of dollars per day per plant," GM said in another filing.

GM obtained a restraining order last month compelling CCM to continue supplying those items specified in its purchase orders with GM. But that order expired July 1. CCM filed for protection under Chapter 11 of federal bankruptcy law on July 7.

………

In a separate dispute, CCM wants to use $1.9 million of cash it held when it filed for bankruptcy to pay its workers. GM contends it provided most of that cash as part of its temporary restraining order.

GM doesn't object to CCM paying workers for what was produced before the bankruptcy filing, but it does not want its cash used to pay workers if they aren't making GM's parts.

This could get very messy very quickly.

A lot of plants are retooling for the new model year right now, but if they lack the parts to reopen, we are going to see some major issues with the economy just as the presidential election ramps up, particularly in the Midwest.