Report: GM purchasing chief says that supplier crisis is not over yet

Article by Christian A., on August 27, 2010

After serving a few months as the new purchasing chief for General Motors Co., Bob Socia in an interview expressed his worries about more financial trouble coming as production ramps up.

Socia, currently the vice president of GM's global purchasing and supply chain, said that he expects "more troubled suppliers as the volumes come back."

GM purchasing chief explained that there's nothing to indicate that the economic troubles are now behind it. The car industry continues to face liquidity issues and most suppliers are still weakened financially, meaning that they have difficulty securing operating funds from banks and shoring up their capital.

Socia had taken over in June when his predecessor, Bo Andersson, left to assume the chairman's job with Russian automaker GAZ.

Socia said GM faces a serious challenge from its weakened supply base. Supplier problems had worsened when GM and Chrysler Group geared up production after two months of inactive assembly plants.

As a result, suppliers struggled to obtain cash to bridge the gap between the startup of parts production and the arrival of revenues. Typically, this gap spans 45 to 60 days. GM reportedly has 140 to 150 troubled suppliers that it is closely monitoring. [via autonews]

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