09 June 2009

The head of the embattled US carmaker GM says its suppliers are among those that "have sacrificed in the past and will sacrifice in the future", as the company cuts costs in a bid to emerge from its Chapter 11 bankruptcy.

At a press conference at the General Motors building in New York on 1 June, GM president Fritz Henderson said "extraordinarily difficult steps" lay ahead.

An agreement with governments in the US and Canada - that saw the US provide support of $30 billion (£18.3 billion) and Canada $9.5 billion (£5.8 billion) for a stake in GM - provided "a fast-track plan to form a leaner, quicker, more customer- and completely product-focused company", he said.

"This new GM will be built from the strongest parts of our business," added Henderson, who expected the new GM to be launched in up to 90 days.

GM pledged to pay essential suppliers for goods and services provided before and after the company's court filings on 1 June. The definition of "essential suppliers" was not clear.

GM filed for Chapter 11 bankruptcy just weeks after fellow US car company Chrysler took similar steps.

Meanwhile, there were concerns in some quarters about the strength of the automotive supply chain in the US. Business intelligence firm CVM Solutions found "troubling aspects" in its analysis of common suppliers of three major automotive manufacturers and two large Tier 1 automotive suppliers.

The CVM Solutions study found that 7.3 per cent of the five companies' suppliers were shared by more than one, indicating that if a specific vendor becomes high risk, it has a strong likelihood of affecting other members of the automotive industry.

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