DETROIT — A nine-week summer shutdown at most of General Motors' North American plants could bankrupt as many as 10 percent of GM's top 300 parts makers, says a source familiar with GM's thinking.
The 300 top suppliers ship more than 80 percent of the parts that go into GM vehicles. The automaker has 1,500 parts suppliers, all of which will suffer from the shutdown.
The 300 range from small companies such as mirror maker Gentex Corp. to multibillion-dollar enterprises such as seat maker Lear Corp.
GM spokesman Dan Flores declined to comment on the likelihood of bankruptcies. But he acknowledged that the lengthy production shutdown will cause cash-flow crises among suppliers.
"We recognize these production cuts are going to be very painful, but the decision was required as we continue to bring our inventories in line with market demand," Flores said.
GM's purchasing executives have been mindful of the potential for trouble, and they have kept suppliers informed of their intentions.
During his weekly teleconference with suppliers on Thursday, April 23, Bo Andersson, GM group vice president for purchasing, notified suppliers of the nine-week shutdown. GM's action will expand the usual two-week summer shutdown and cut existing production plans by 170,000 units.
