By on July 13, 2016

General Motors #AMERICA

GM is facing off with a key parts supplier in bankruptcy court today, but the drama between it and the Clark-Cutler-McDermott Company started at the same time the automaker handed the company a nice award.

The Massachusetts-based CCM axed its workforce on July 8 and declared chapter 11 bankruptcy, leaving the automaker without the insulation and trim parts needed to build most of its vehicles. A continued disruption in the supply chain would be a massive blow to the automaker, forcing it to shut down assembly plants throughout North America.

Court documents show that at the same time GM was handing CCM a “Supplier of the Year” award at Detroit’s Cobo Center on March 10, CCM had already told GM it had defaulted on a loan and was looking for a handout in order to stay afloat.

Not only did CCM accept millions of dollars in loans from GM to keep the supply chain flowing, the supplier now wants to sell off GM-owned tooling using funds the automaker supplied to keep the parts in production. GM’s court date relates to an objection motion it filed in a Massachusetts bankruptcy court on July 8 to halt the sale.

The case is a nasty one, with brinksmanship and bitter back-and-forth everywhere you look.

According to documents filed by the automaker (and published by NBC affiliate WFMJ), GM was funding 100 percent of CCM’s operating costs at the time it declared bankruptcy, after months of secured loans that began flowing on March 14. The first month alone saw $1.85 million in loans sent to CCM in three installments.

April saw an Interim Accommodation Agreement forged between the two companies and Wells Fargo, CCM’s creditor, but a final agreement couldn’t be reached. GM blames CCM’s “outrageous demands,” which included the automaker paying off CCM’s creditor in full (to the tune of roughly $1.5 million) as well as its pension withdrawal liability. If those demands weren’t met, CCM threatened to shut down, which it tried to do on June 17. (GM was granted a temporary restraining order to keep the parts coming, though that order expired Monday.)

Between April 25 and June 10, GM claims it provided the supplier with further loans totaling $1.5 million. The restraining order meant CCM could only use those funds for the production of parts for GM. Between June 17 and July 11, GM loaned another $3.45 million to the supplier, and paid $1.82 million through a funding agreement that increased the price paid for parts.

As the end of the restraining order period neared, things got nastier. GM claims it was willing to fund a wind-down of CCM’s operations, but suddenly CCM filed for bankruptcy “less than 24 hours after receiving notice from GM of GM’s intention to remove all GM-owned tooling from the Debtor’s facility.” GM had planned to use an option to purchase the remaining equipment and inventory of parts.

Through the bankruptcy process, CCM seeks a turn-key sale of assets from its Franklin, Massachusetts plant using roughly $1.93 million in funds provided by the automaker for production of parts. With no other supplier to provide those critical parts, GM needs those assets to continue production of its vehicles.

GM claims the supplier’s bankruptcy is due to the “self-interested and wrongful conduct” of its owners, while CCM claims it is “breaking the chains of bondage that forced the Debtors to continue producing auto parts for GM at a substantial loss.”

The court hearing commences this afternoon.

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43 Comments on “GM Handed ‘Supplier of the Year’ Award to Key Parts Maker After it Defaulted and Asked for Cash...”

  • avatar

    Well, maybe they are supplier of the year…just not for the usual reasons.

  • avatar


  • avatar
    Big Al from Oz

    Well, I do believe GM must make a decision.

    Do I want to produce vehicles or not.

    I do hope the parts supplier doesn’t receive any tax payer money. Let if fold and GM should start looking elsewhere, Mexico or even overseas.

    With the US dollar high, it will be very costly to buy ‘Murican.

    The expensive ‘Murican made parts will affect the total industry.

    Maybe a greater use of robotics in the US will make manufacturing more attractive.

    Let this company sink and let GM be reminded that using it’s “power” to obtain parts at the price it wants might also be a factor.

  • avatar

    Makes total sense. Trying to let them know how valuable they are to the operation before they pick up their ball and leave. Business speak for “I love you, please don’t go. We can work this out.”

    • 0 avatar

      And they will work it out. At issue here is the equipment. GM wants their equipment so that GM can produce the parts GM needs.

      Labor is where you find it. Chances are, the current operators of the machinery will be hired by GM when GM gets the equipment back, and those “new” employees will become UAW members.

      No one gives a schit about the owners of the business. All GM cares about is those parts and the machinery that makes the parts. No one gives a schit about the worker bees. Either they jump on board with GM and continue to make the goods or they can go hungry. It’s the harsh of the world.

      There is no doubt in my military mind that the courts will side with GM, and give GM all the tools and machinery they need to maintain the status quo. And to continue to make vehicles.

      Too big to fail!

      • 0 avatar

        “There is no doubt in my military mind…”

        Reminds me of my favorite oxymoron: Military intelligence.

        Actually, it’s my second favorite oxymoron: “Trump University” is first
        -kudos to PCH on that one.

        • 0 avatar

          Don’t knock the military they gave us some very useful acronyms.

          In my job I use the terms SNAFU and FUBAR and Whiskey Tango Foxtrot all the time…

          • 0 avatar

            LOL! PD, I wrote that with a touch of cynicism.

            I would not join the US military of today, if my life depended on it, and I would not recommend any of me and mine to do so either.

  • avatar

    Perhaps Government Motors could contact Wells Fargo and buy CCM’s debt at a discount. They then could dictate terms. CCM is privately held and bankrupt.

    People at GM should be fired for not properly managing vendor relations.

  • avatar


    Way to show the other suppliers what it takes to win the award.

  • avatar

    GM has a long history of troubled relationships with suppliers. Before GM sued him and VW for theft of proprietary information, Ignacio Lopez was one of Roger Smith’s favorites over the way he made suppliers cut their prices.

    I worked for a small computer supply company back in the early 1980s. My boss refused to do business with GM, “They take longer to pay than the U.S. Army,” was his explanation. We did supply Ford and GM.

    I later worked for DuPont’s automotive coatings unit. At any one time, GM owed us many millions of dollars. We had about two dozen people whose job it was to keep track of our accounts receivable with GM and to get them to pay us.

  • avatar
    DC Bruce

    Someone’s head needs to roll for getting GM into a sole source relationship with a supplier of an indispensable component. And then that same or another head (maybe a lawyer’s needs to roll for not either taking a security interest in the tooling, etc. that GM is now trying to get or establishing outright ownership, perhaps with some sort of leaseback.
    This is not Japan, fellas.

  • avatar

    They probably had the award all engraved already and didn’t want it to go to waste.

  • avatar

    Sounds as though even GM checkwriters don’t talk to each other. A case of “Emptoris NON caveatus” . CCM appears to be playing a certain automakers Financial department with as many lawyers that can still be working their “legal” department over;! On a certain automakers dime. How not cheap ! Take a deep breath now.

  • avatar

    I don’t know about GM’s Supplier of the Year criteria, but in every industry I’ve worked in, SotY is generally not based on financial sustainability. It is usually based on some combination of on-time delivery, PPM, Quality, cost reductions, continuous improvement, VA/VE, etc etc.

    That being said, it is awkward and counterintuitive to give your bankrupt supplier a SotY award.

    • 0 avatar

      LeMansteve, it was “awkward and counterintuitive to give your bankrupt” GM a bailout and nationalization too.

      But it was done.

      And now that is relegated to the toilet bowl of history, sans $10Billion.

    • 0 avatar

      You’re right. This is essentially saying the manufacturing and logistics entity (the people who will lose their jobs) were doing a fantastic job.

      It’s f*cking tragic.

      • 0 avatar

        You’re right. $10 billion was a small price to pay. Imagine all the good we could do with $100 billion. We could move a lot of people to beaches and get them all the booze they can drink and all the drugs they can smoke. For $1000 billion dollars, we could move everyone somewhere nice and the only fool that would have to work is the guy pressing the print button on the money machine.

  • avatar

    I really do not see how GM is in the wrong here, how can a court not side w them, more jobs will be tossed and GM is not to be blames in this case for that.

  • avatar

    Last time I heard of CCM, that stood for Canada’s largest bicycle manufacturer.

    • 0 avatar

      The CCM bicycle cartel (which later started making skates and hockey equipment) was incorporated out of a number of smaller Canadian companies, including the Windsor, Ontario bike shop of John and Horace Dodge. One of the Dodge brothers had invented a dustless bicycle hub that was commercially successful. After the brothers sold their bicycle company, they used that money to set up their machine shop in Detroit, becoming Henry Ford’s primary supplier for the first 10 years of the Ford Motor Company.

  • avatar

    Congratulations to GM. In the race to the bottom of prices, they have won. Unfortunately, the prize is the splinter at the bottom of the barrel. They now know the absolute lowest price that these parts can be produced at, and won’t waste future time in trying to pay even less.
    Per the above article, it’s not like GM didn’t have any warning that their producer was doing terribly financially. Doesn’t major manufacturing prowess include watching the supply line??
    How does squeezing a parts manufacturer dry, and a “20% off” discount on old “on the lot” stock of autos, come out of the same administration?? Perhaps analyzing the need for the “20% off” sale, would be time better spent that chiseling a few pennies off the insulation manufacturer???

    • 0 avatar

      We’ve known for several decades now that American-produced goods are not competitive, cost-wise, with those made elsewhere.

      My guess would be that GM will eventually start making these parts in Mexico, or Asia, at a much lower cost.

      • 0 avatar

        How well does “just in time” supplier work when the supply chain is 6,000 miles long?

      • 0 avatar

        I’m just going to tell Ford, Allen Edmonds, Boeing, Johnson & Johnson and IBM to close shop now. The high Rommel-wannabe has declared them uncompetitive.

      • 0 avatar
        SCE to AUX

        Asia is unlikely, due to the high cost of transporting bulky, lightweight *insulation* from there to GM’s assembly plants.

        I’d say this is the sort of item you want to produce domestically, fairly close to the final assembly.

        • 0 avatar

          ” this is the sort of item you want to produce domestically, fairly close to the final assembly.”

          Yup, if you can. But it has already been proven that it can’t, with the financial implosion of this manufacturer.

          Of course, with the right kind of financial help, they (CCM) could come roaring back from Ch 11, and continue the status quo.

          I gotta go. I’ve got trash to burn with old engine oil and used gasoline…….


    • 0 avatar

      I’ve thought about getting a 20% off Spark with a manual transmission. Under $11000! Then I realize that it’s a tin can GM-DAT product and it probably won’t last me long. Then I realize that I should continue driving my TDI for as long as I can and get a real car when I’m ready.

      • 0 avatar

        Is the Spark known for not lasting long?

        Its been out for a while, there should be some data on it.

        If you expect a tiny, unprofitable economy/city car to be designed/built in the same buildings that’s used for the next-gen Silverado, are you willing to pay more for it? A lot more?

        It makes sense for GM to assign small car development to its Korean arm. Why not? They’ve done well with the Cruze, its the most competitive small car GM has had in a decade or more. Its not like these current products are just fresh-faced Suzuki Renos, they’re pretty good for what they are. Maybe not Honda good, but show me a new $11000 Honda.

        Its amazing what you can do in Korea when you have a rich American step-father pouring money on you.

  • avatar

    —> GM claims the supplier’s bankruptcy is due to the “self-interested and wrongful conduct” of its owners….

    Pot. Kettle. Black.

  • avatar
    SCE to AUX

    My employer once floated a sole-source supplier for about 3 months, and it worked out very well. He survived a dry spell, we got parts, and everybody made money.

    But we didn’t squeeze him for 3% price reductions every year, either.

  • avatar
    SCE to AUX

    If it wasn’t for the pension liabilities that come with it, GM would probably just buy the whole business and make the parts themselves, with the same line workers.

    But I understand: this isn’t River Rouge (Ford) anymore, and they’d rather write a check for parts than deal with more payroll/overhead/administrative issues.

  • avatar
    Jeff S

    Genuine GM parts, Hecho en Mexico. Senior Goodwrench, hasta la vista.

  • avatar

    “GM blames CCM’s “outrageous demands,” which included the automaker paying off CCM’s creditor in full (to the tune of roughly $1.5 million) as well as its pension withdrawal liability. If those demands weren’t met, CCM threatened to shut down.”

    Wait a second. Isn’t that what GM did to us a few years ago??

  • avatar

    I can’t imagine that GM and other companies don’t have an idea what it costs to make parts. You also want the company there for chargebacks when parts they make come in for warranty in disproportionate amounts. I recall a dashboard in the Ford Contour which warped. They replaced them for a while, then when it became too expensive, came up with trim and bigger grommets.

    This company must have gone under for other reasons too.

  • avatar
    Sid SB

    Steven Kieffer did a Autoline Weekly show:

    Claimed to have changed the direction of GM Tier 1 and basically looking for long term partnerships. This story has you wondering if old GM is still lurking in the background.

  • avatar
    Jeff S

    Agree, there might be more reason that this company went under than what is stated in this article. GM should get their tooling back and contract their parts out to someone else. GM could set up a parts supplier in Mexico with their tooling, but in the meantime they need to find another supplier soon otherwise they will not be making vehicles.

  • avatar

    Here’s a story in a trade publication about GM’s practices:

  • avatar

    During the All-Star Game, Chevy aired another one of those ads with that weaselly-looking dude talking to “real people, not actors” about how Chevy is the “most awarded car company” of the year. I’ve gotta quesiton the authenticity of some of those awards. Heck, I love Camaros, but MTCOTY? C’mon. And don’t get me started on Consumers Digest…

  • avatar

    Would it be wrong to point out there is nothing to see here?

    Would it be wrong to point out that Toyota gave CTS a supplier quality award while CTS was churning out defective gas pedals by the hundreds of thousands?

    Would it be wrong to point out that a search of the TTAC archives would reveal this?

    Would it be wrong to point out that supplier awards, heck, corporate award programs are completely BS and really just indicate how well companies kiss each others arses?

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