GM looks for alternative supplies in China after deadly factory blast

Volunteers carry a man who fainted at a caring center for relatives of victims of the Kunshan factory explosion. Photo credit: Reuters

UPDATED: 8/4/14 3:17 am ET - adds details

BEIJING (Reuters) -- General Motors Co. has asked one of its Tier 1 suppliers in China to find an alternative source of components after an explosion ripped through a factory on Saturday, killing at least 75 people and injuring 185.

The accident at the Kunshan Zhongrong Metal Products in Kunshan in the eastern province of Jiangsu was China's worst industrial accident in a year.

Chinese officials have blamed the chairman of the factory and local regulators for safety breaches that led to the accident, the official Xinhua news agency reported on Monday.

A preliminary investigation suggested the blast was triggered by a flame lit in a dust-filled room, local government officials said. Dust can be highly explosive when it is suspended in air in the right concentrations, even for materials such as aluminum and iron that don't typically burn.

Kunshan Zhongrong, which polishes aluminum wheels for automakers including GM, failed to properly store dangerous goods, did not have appropriate ventilation or dust removal systems, and had a substandard electrical system, according to the government investigation cited by Xinhua.

The factory also ignored prior warnings about dust, did not have appropriate fire safety equipment and did not provide safety training for workers, according to the report. A senior official in charge of China's work safety administration called the situation a "very serious dereliction of duty," Xinhua reported.

Neither Kunshan officials nor executives from Kunshan Zhongrong could be reached for comment.

GM said on Sunday that it had asked its Chinese supplier to find an alternative source of components after the explosion. The automaker issued a statement saying it bought components from a company called Dicastal, which Zhongrong works with. GM went onto say it had no direct dealings with Zhongrong, which it described as a Tier 2 supplier.

Tier 1 component suppliers such as Dicastal are "required to source from Tier 2 suppliers who must meet both in-country environment and safety standards as well as quality standards," GM said.

GM described Dicastal as one of its global suppliers but did not provide any further information on the company.

The accident did not cause any immediate impact on its production because it has sufficient inventory of the parts, GM said, without specifying what the components were. "We are working with our supplier to establish alternate processing capability," the company said.

A GM spokeswoman in Shanghai said she had no information on whether GM conducts safety inspections of production facilities run by lower-tier suppliers with which they do not do business with directly.

Xinhua said previously that two company representatives had been taken into police custody and that President Xi Jinping had demanded a full inquiry into what happened and punishment for those responsible.

It said on Monday that the State Council has approved a special task force to investigate the accident and will soon carry out nation-wide inspections on plants and their dust control measures. It also said that authorities will draw up comprehensive regulations and standards on dust control at factories.



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