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GM concerned about suppliers’ viability

October 23, 2009

GM concerned about suppliers’ viability

The Detroit News

General Motors Co. expects more parts suppliers will struggle financially and is monitoring about 150 companies as the auto industry tries to recover.

Bob Socia, vice president of GM’s global purchasing and supply chain, expects some suppliers will have trouble surviving as industry volumes increase next year, when GM estimates North American production could rise to 2.8 million units from about 1.8 million this year.

"Our concern has to do with liquidity as some of these suppliers may be still in a weak financial position and would have to go and try to secure additional funds to shore up working capital and may not be able to get it," Socia said. "I do think we’ve got some troubled waters out in front of us for next year."

Socia succeeded Bo Andersson, who left in June to take a job with Russian automaker GAZ. He inherited a smaller team and relations with suppliers that had soured. He has made several changes, most notably speeding supplier payments.

Historically, GM has paid suppliers once per month and an average of 47 days after parts are delivered. But last month, GM said while the 47-day average will remain in place, payments will be made every Tuesday starting with Nov. 1 deliveries.

Socia has aligned purchasing with engineering to improve communication and hasten decisions affecting suppliers. He also has focused on improving relationships with suppliers.

© Copyright 2009 The Detroit News. All rights reserved.

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