Plastech Redux: GM Wants C11 Supplier's Tooling– Or Another Shutdown
In 2001, GM named Progressive Progressive Molded Products supplier of the year. Boston investment firm Thomas H. Lee Partners bought Progressive in 2004. With '07 revenues cresting $1.4b in 2007, the company's been a major GM supplier (TTAC is still investigating which parts they make for which GM vehicles). Yes, well, like so many other suppliers, Progressive got stuck between rising raw material costs and declining prices. Progressive filed for Chapter 11 on June 20, listing $500m in debt vs. $50m worth of assets. And now, as the court prepares to liquidate the supplier, GM has asked for court approval to seize tools from Progressive. Reuters reports says GM's filing cites "potential supply disruptions" that could "force the carmaker to shut its assembly lines." "The tooling is essential to ensuring the production of the component parts GM's assembly lines depend on," GM said in court papers, describing the company as a "single-source" supplier. You may recall that a federal bankruptcy judge withheld supplier Plastech's tooling from Chrysler, which forced ChryCo to temporarily suspend production. That's all GM needs right now. Or, strangely, maybe it is.
RF - do you know how the supplier situation has been for the trasnplants, are they getting stuck between rising raw material costs and declining prices to the point that they are being forced out of business. Or is this only related to the beat the suppliers down to within and inch of death domestics. Toyota and Honda look like they have a symbiotic relationship with their suppliers and look like they would be doing what they could to keep them healthy and profitable.
"Didn’t you just watch the Chrysler-Plastech saga play out? Chrysler bad. Plastech Good - then bad - but still Chrysler bad." LOL. Alex very funny. TTAC very funny. Both good.
If a supplier is in Ch.11 the courts won't let any contracts they have with an OEM to be re-bid or re-sourced. Effectively, those contracts are now written in stone, unless they are not in the supplier's best interest (money-losers) in which case they can be renegotiated. Same goes with tooling. If the tooling were to be moved the supplier would lose a revenue stream - must be negotiated through with the bankrupcy judge before you move it. Oddly enough, if the company was doing OK they'd help you move the tools out. This is why it's key that the OEM's and the suppliers work together to make sure they both survive. Too bad only the Asian OEM's understand this.
They for sure make bezels for the DIC switches in the lucerne/lacrosse for Oshawa. Sad to see people lose their jobs, but they were a TERRIBLE company to have to work with.