Supplier wants $75 million line of credit from GM

[Dragon]

found this on another forum. anybody heard anything about it?

"Yorozu has demanded that if GM wishes to continue receiving stampings, GM must post a $75 million letter of credit as an assurance of performance. Yorozu told GM it is asking for the letter under terms of the Uniform Commercial Code, the general set of laws governing business transactions.

Yorozu justifies its demand by asserting that GM is no longer a financially sound customer, based on its recent filings with the U.S. Securities and Exchange Commission. GM lost more than $10 billion in 2005 and an additional $323 million in the first quarter of this year. "

[CARBIZ]

I'd tell them to screw off. If they have no faith in GM, then let them get contracts from Toyota.

[Dragon]

I'd tell them to screw off.  If they have no faith in GM, then let them get contracts from Toyota.

faith ain't gonna pay the bills if GM goes bankrupt

Edited May 5, 2006 by Dragon

[Newbiewar]

faith ain't gonna pay the bills if GM goes bankrupt

the only portion of bankrupt GM is considering or anyone believes GM ought to consider, is chapter 11... restructuring... this voids GM's legal contracts, it does not void GM of any bills or pass dued payments...

so the advantage to GM filling chapter 11... is to remove of the ever so hindering UAW...

in return would probably force workers to work at half the wage with half the benifits and make a huge amount of profits... allowing it to pay off its debts... but we know that wont happen...

[Hudson]

I think the whole point is being missed here. GM is demanding price reductions from their suppliers year after year. Yorozu either can't afford the price cuts any longer or can use the capacity now being tied up by GM parts for more profitable clients. Either way, GM had better change their ways.

When a Toyota supplier has a problem, Toyota helps. When a GM supplier has a problem, GM looks for another supplier...and demands price reductions.

This is not a Yorozu problem...it's a GM problem. I just wish more suppliers would do this to GM.

[Clownzilla]

I think the whole point is being missed here. GM is demanding price reductions from their suppliers year after year. Yorozu either can't afford the price cuts any longer or can use the capacity now being tied up by GM parts for more profitable clients. Either way, GM had better change their ways.

When a Toyota supplier has a problem, Toyota helps. When a GM supplier has a problem, GM looks for another supplier...and demands price reductions.

This is not a Yorozu problem...it's a GM problem. I just wish more suppliers would do this to GM.

Well, Toyota can "help out" the supplier because they have major cash! GM has to find new suppliers that will lower prices so they can survive! Listen, if suppliers keep doing this, I'm sure the Chinese will be very happy to supply GM with ANYTHING they need.

[ellives]

Clueless as usual. What's so unique about GM asking for price reductions? Ever hear of Walmart? They've built themselves on this approach. In fact they're out and out sleazy about it. Not only do they ask for price reductions, they LOOK for reasons to reduce their costs through "deductions." Late with a shipment? Deduction. Wrong size box? Duduction. Wrong or missing barcode label? Deduction. Don't like it? Too bad. Find somewhere else to sell your products.

This is where Yorozu will find themselves eventually if the current trend continues.

In the end, the problem is not a GM problem, it's a shared problem between GM and Yorozu. They need to work together to come up with a reasonable approach. Seems interesting this business transaction became so public. Is it possible Toyota has some kind of ownership interest in Yorozu?

If *I* was GM, I'd get the best terms I could with Yorozu and then quietly find another supplier. Once I had the upper hand, I'd tell Yorozu to Eff themselves.

I think the whole point is being missed here. GM is demanding price reductions from their suppliers year after year. Yorozu either can't afford the price cuts any longer or can use the capacity now being tied up by GM parts for more profitable clients. Either way, GM had better change their ways.

When a Toyota supplier has a problem, Toyota helps. When a GM supplier has a problem, GM looks for another supplier...and demands price reductions.

This is not a Yorozu problem...it's a GM problem. I just wish more suppliers would do this to GM.

[andretti]

Clueless as usual. What's so unique about GM asking for price reductions? Ever hear of Walmart? They've built themselves on this approach. In fact they're out and out sleazy about it. Not only do they ask for price reductions, they LOOK for reasons to reduce their costs through "deductions." Late with a shipment? Deduction. Wrong size box? Duduction. Wrong or missing barcode label? Deduction. Don't like it? Too bad. Find somewhere else to sell your products.

This is where Yorozu will find themselves eventually if the current trend continues.

In the end, the problem is not a GM problem, it's a shared problem between GM and Yorozu. They need to work together to come up with a reasonable approach. Seems interesting this business transaction became so public. Is it possible Toyota has some kind of ownership interest in Yorozu?

If *I* was GM, I'd get the best terms I could with Yorozu and then quietly find another supplier. Once I had the upper hand, I'd tell Yorozu to Eff themselves.

Unbelievable! You missed the whole situation and furthermore you haven't even looked up who Yorozu is. This has nothing to do with GM asking for price reductions.

This is an issue of a very good quality supplier who sells to Toyota, Honda, Chrysler as well as many nonautomotive manufacturers. They do not need GM! GM came to them to get these stampings sourced and Yorozu gave them a very good rate but requires a credit line to be sure they get paid. GM likes to "fine" their suppliers for any and all transgressions no matter how small. If you are late or if anything is not as GM wants it they will fine you by reducing the amount they pay. Also GM likes to stretch out the payments and then refuses to pay any penalties or interest on late payments. GM is fortunate a supplier with the quality and reputation of Yorozu will even do business with them, on any terms.

Edited May 7, 2006 by andretti

[Hudson]

Clueless as usual. What's so unique about GM asking for price reductions? Ever hear of Walmart? They've built themselves on this approach. In fact they're out and out sleazy about it. Not only do they ask for price reductions, they LOOK for reasons to reduce their costs through "deductions." Late with a shipment? Deduction. Wrong size box? Duduction. Wrong or missing barcode label? Deduction. Don't like it? Too bad. Find somewhere else to sell your products.

Yes...and how many of Wal-Mart's products are now sourced from China? Don't you think that's the direction GM's heading with their demands? Where Toyota nurtures a good quality supplier, GM encourages them to find lower and lower cost parts. GM is pushing (in some cases explicitly) to move to China.

And this "buy American" kick that so many on this site are on encourages the purchase of GM products?

[ellives]

They're (GM) trying to survive. Given they have disadvantages in so many other areas, they need to pursue any opportunity or approach they have to save costs. If one of them is to source in China so be it.

Unfortunately the "buy American" thing is really a bit of nostalgia. I'm quite sure most Americans would love to know they're cars are built completely with US labor. This is obviously not happening and it won't happen in the future either. The horse is out of the barn. Personally I'm not so focused on the "buy American" thing as I am on giving GM a chance to become a great company again. If they can't do it, it should be because they can't build better cars at competitive prices. It shouldn't be because of propaganda, heresay and FUD.

2007 is a make or break year for GM. They MUST resolve their labor inequity situation. One can argue about comparative approaches to manufacturing and vendor management strategies all you want. In the end, if labor and legacy costs are 2x your competitors, you're going to fail. This is the reality.

Yes...and how many of Wal-Mart's products are now sourced from China? Don't you think that's the direction GM's heading with their demands? Where Toyota nurtures a good quality supplier, GM encourages them to find lower and lower cost parts. GM is pushing (in some cases explicitly) to move to China.

And this "buy American" kick that so many on this site are on encourages the purchase of GM products?

[Mr.Krinkle]

buyers set the market prices. not sellers.

asking for credit is tantamount to saying we dont trust you, we want our money now.

f that, this is a situation that doesnt need to play out in the court of public appeal.

theres a problem...work it out.

this is jerry springer all of a sudden. the hell with that. theres plenty of other suppliers that are more than willing to pick up a contract with a company that has the potential of general motors.

and what if in good faith gm extended this line of credit, then poof...they disappeared. its unreasonable to request such demands. thats not the way business is done.

ideally it should be mutually beneficial. again though, this is fishy to me because its not the type of that should play out anywhere else but between gm and whomever.

[jry]

the only portion of bankrupt GM is considering or anyone believes GM ought to consider, is chapter 11... restructuring... this voids GM's legal contracts, it does not void GM of any bills or pass dued payments...

so the advantage to GM filling chapter 11... is to remove of the ever so hindering UAW...

in return would probably force workers to work at half the wage with half the benifits and make a huge amount of profits... allowing it to pay off its debts... but we know that wont happen...

chapter 11 does allow the debtor relief from paying any "pre filing" bills. this could hurt a supplier. under a plan of reorganization, the court could approve the paying off of creditors, usually for pennies on the dollar (k mart, most of the airlines, etc.). is gm going to file? highly doubt it. is the supplier being stupid? yup. they are probably loyal toyota folks that wouldn't mind giving the general a little bad press. cut 'em loose.

[FUTURE_OF_GM]

I think the whole point is being missed here. GM is demanding price reductions from their suppliers year after year. Yorozu either can't afford the price cuts any longer or can use the capacity now being tied up by GM parts for more profitable clients. Either way, GM had better change their ways.

When a Toyota supplier has a problem, Toyota helps. When a GM supplier has a problem, GM looks for another supplier...and demands price reductions.

This is not a Yorozu problem...it's a GM problem. I just wish more suppliers would do this to GM.

What a surprise...

So, when it's GM against Toyota, it's a cutthroat comparison in which "If GM can't compete, it should die"

BUT, when it's GM against another company in the same situation as GM, then GM should be the patron saint and sacrifice itself... and die.

(See a pattern)

And the fact that you WISHED more of this sort of action against GM show which side of the fence you're on and it definately isn't GM's

It's sad when supposedly unbiased insiders (like all insiders here) blatantly DEATHWISH GM in public on a GM board (like all insiders here do)

I'd just like to know why all of you hold such a HUGE grudge against GM? Did they kill you kids or something?

Oh, and consider this portion of this thread

[FUTURE_OF_GM]

Yes...and how many of Wal-Mart's products are now sourced from China? Don't you think that's the direction GM's heading with their demands?

Who cares?!?!?!

Given your history of posts (and probably other media) it's safe for me to assume that you're an advocate of buying ANYTHING import over GM, thus pretty much encouraging a bankruptcy/dissolve, so what's the difference? Would you rather buy your products from an OUTRIGHT ASIAN OWNED company or an AMERICAN firm that CONTROLS the money?

Where Toyota nurtures a good quality supplier,

Oh, save it man.... I'm so sick of the "insider Toyota corporate policy" on this site and others that I could puke. Yes, yes, we all know that Toyota is an omnipitent presence that brings us nothing but joy, happiness, and fulfill ment and that GM should be banished to hell. WE'VE established that and WE know that you're "ENLIGHTENING" the public for a reason.

GM encourages them to find lower and lower cost parts. GM is pushing (in some cases explicitly) to move to China.

BECAUSE YOUR JAPANESE AUTOMAKERS HAVE SUCH A HUGE COST ADVANTAGE!!!!!! WHAT ABOUT THAT DO YOU NOT UNDERSTAND?!?!? YOU INSIDERS PREACH ABOUT GM OUTSOURCING, YET YOU NEVER MENTION ANYTHING ABOUT HOW UNFAIR IT IS TO BE AN AMERICAN CORPORATION WITH YEARS OF LEGACY COSTS IN A COUNTRY THAT PROMOTES YOUR COMPETITORS. WHICH LEADS ME TO BELIEVE THAT YOU WOULD RATHER JUST SEE GM DIE, INSTEAD OF BECOMING MORE EFFICIENT.

These are the VERY same people who preach "THAT'S CAPITALISM!" at GM when Toyota mops the floor with their asses in America, yet, we WHO INVENTED modern capitalism, have to play by a different set of rules?!?!?!?! WE cannot out source our labor/parts to other countries to achieve a competitive advantage?!?!?! Something smells fishy to me; sounds like someone has alterior motives to me.

And this "buy American" kick that so many on this site are on encourages the purchase of GM products?

You know, ever since I posted with you (Which has been a LONG time---a lot longer than our time here on C&G) you've been against the "buy American" spiel (Which I agree with to an extent---the consumer SHOULD NOT be forced to buy inferior products JUST BECAUSE they are American----but that scenario DOES NOT APPLY in todays market)

So, here we are at a topic in which you've complained about GM outsourcing, APPARENTLY because you care about our economy, workers jobs, and GM's benefit to that economy. (That's not why I think, but I'll give you the benefit of the doubt) THEN, in the very same breath you preach that "YOU SHOULD NOT BUY AMERICAN, JUST FOR THE SAKE OF SUPPORTING AMERICANS"

So which is it?!?!? We can't rightly have GM be faithful to this country and lose MASSIVE amounts of money just in 'good faith' and then have people like you go on record wishing for GM's destruction.

What it boils down to is this: These analyst and media types KNOW that GM is pretty much DAMNED either way, and they'll do all in their power to exploit which ever way it goes because apparently they've all been snowed or apparently all have some sort of HUGE grudge against GM and every aspect of society which is linked to them. (like MOST of the people that I can STEREOTYPE to think the same way as them)

So, in essence, what it boils down to is this: WILL THE PUBLIC SEE THROUGH THESE BLATANT ATTEMPTS TO DESTROY WHAT'S LEFT OF DETROIT AND MAKE SURE IT NEVER REKINDLES OR WILL THEY SEE THE "SKEWED AND SPUN" TRUTH. My guess is a little bit of both, but overall, I'm sure these people will suceed. I mean, when you're being attacked from all sides, (analysts, media, public, image concious) deliberately and blatantly, as GM & Co. is now, there isn't much you can do. Maybe we'll all get lucky and another firm will buy the rest of Detroit out like happened with DCX so that the media won't have the BURDEN of ridding us of more manufacturing and more of what made this country great, in the self loathing style of which they were borne.

P.S. Save the angry e-mails/PM's because you'll just get more angry and challenging responses back.

[evok]

FOG: You sound ignorant, misguided and well frankly a fool. Nothing has changed in your childish posts in 6+ years. You are just an angry person that needs a lot of growing up.

"P.S. Save the angry e-mails/PM's because you'll just get more angry and challenging responses back."

Sorry but you could not even challenge a mule.