General Motors won court approval Wednesday to retrieve tooling and finished parts from a key longtime Massachusetts supplier that is reorganizing under U.S. bankruptcy protection, avoiding a shutdown of most of the automaker’s North American assembly plants.
GM obtained immediate access to production tooling and parts inventory from Clark-Cutler-McDermott Co., a Franklin, Mass., supplier of acoustic material that filed for bankruptcy protection on July 7.
GM said Wednesday it also has identified other suppliers to provide the automaker with similar parts going forward. A GM spokesman declined to identify the suppliers.
GM and Clark-Cutler-McDermott reached as agreement after a hearing was held at the U.S. Bankruptcy Court for the District of Massachusetts.
“We have reached a settlement with Clark-Cutler-McDermott and do not anticipate any disruptions to our supply chain or business,” a GM spokesman said.
Clark-Cutler-McDermott makes dash insulators, wheelhouse liners, floor insulators, fender and pillar insulators and other parts used in all GM cars and light trucks assembled in North America.
GM had no other suppliers of the parts.
Clark-Cutler-McDermott filed for Chapter 11 bankruptcy protection after GM filed a motion to acquire equipment and tooling owned by GM and certain inventory.
The automaker is the supplier’s largest customer by volume, accounting for more than 80 percent of its revenue. Clark-Cutler-McDermott has supplied parts to the automaker for 45 years, court documents said.
CCM's attorneys had argued that the company would lose $30,000 a day if forced to continue making parts for GM. GM said it had been funding CCM's losses since March.
As is typical with such contracts, CCM owned the basic machinery in its plants. But GM owned the special tooling installed in that machinery that was designed to make a variety of insulation and sound-deadening material used under carpets, behind dashboards and in wheel liners.
CCM said it is seeking a "turn-key sale" to another company.
The case underscores the potential risk in the auto industry of "single sourcing" -- contracting with just one supplier to provide critical parts for some or all of a manufacturer's vehicles.
U.S. automakers have used single sourcing, along with longer contracts and common components used by more vehicles, to command more attractive prices from many suppliers.
Reuters contributed to this report.