Supplier Dispute Could Force General Motors To Shut 19 North American Assembly Plants

General Motors Company GM could lose tens of millions of dollars and shut down 19 assembly plants due to a contract dispute with a supplier.

According to the Wall Street Journal, Clark-Cutler-McDermott Co. (CCM), an interiors supplier that makes interior trim components and insulation, filed for bankruptcy last Thursday due to what it claims was an unprofitable contract with General Motors.

CCM supplies 175 parts to General Motors and struggled to keep up with General Motors' "breakneck production pace." In fact, auto suppliers tend to lose money when they are operating above their production capacity.

General Motors accused its supplier the day after its bankruptcy filing of taking advantage of the process for the owners personal interests rather than honor the contracts.

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The Wall Street Journal noted that while General Motors have a contractual right to purchase tools or inventory used in the production of its cars, a bankruptcy proceeding could block these efforts.

CCM hopes to cut it ties with General Motors as part of the bankruptcy proceedings and sell its business. The auto parts supplier said in court documents that it was left with no alternative but to break away from General Motors and its "money-losing operations."

Shares of General Motors were trading higher by more than 1 percent ahead of Tuesday's market open.

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