Auto supplier: GM aid must include terms

By Don Shilling

GM needs to restructure and lower its costs, a local supplier says.

Much of Darrell McNair’s business is tied to General Motors, but he joined a growing chorus that says Congress shouldn’t just turn over billions of dollars to the automaker.

Any aid from Congress should include a restructuring of GM or the automaker will burn through the money and come back for more, said McNair, who owns Nescor Plastics Corp., which employs 100 in Mesopotamia and Champion.

McNair was among a group of suppliers who met Friday in Detroit to share information about GM. His company produces plastic parts, such as air conditioning outlets and cupholders, for several automakers. About 40 percent of its sales are to GM.

“I learned that GM is probably worse off than what the papers are reporting,” he said.

McNair noted that GM in recent years focused on trucks and sport-utility vehicles because those were profitable, but rising gas prices sapped demand for those products and left the automaker with financial losses.

Before receiving federal aid, GM should describe how it will build the energy-efficient vehicles that will sell in the future, he said. Plus, he thinks GM and the United Auto Workers will have to agree on wage and benefit concessions.

Rep. Spencer Bachus of Alabama, ranking Republican on the House Financial Services Committee, has been widely quoted this week for questioning why taxpayers should help GM, which has significantly higher wage and benefit costs than the foreign automakers that have plants in his state.

Republicans have been reluctant to back a plan to lend $25 billion to domestic automakers even though GM has said it needs the plan to be approved this year.

David Cole, director of the Center for Automotive Research in Ann Arbor, Mich., said much of the nation sees labor as greedy and part of the problem for GM. The UAW will have to take some symbolic action for GM’s plea to gain political support, he said.

Cole added, however, that he doesn’t expect large concessions from the UAW because it took steps last year to make GM more competitive. It agreed to take over a special account for retiree health care and to cut wages and benefits for new hires.

For now, McNair said his company is working through lower orders from automakers by scheduling some departments on four-day work weeks and accepting voluntary layoffs from a handful of workers.

GM executives said last week that the company is burning through its cash reserves so quickly that it may have too little cash to run its operations by early next year. GM needs a minimum of between $11 billion and $14 billion on hand but was down to $16.2 billion Sept. 30. The figure dropped $6.9 billion in the third quarter.

McNair said he doesn’t think a bankruptcy would kill GM. The country still will need vehicles, and GM should be able to reorganize and retain production, he said.

McNair said he thinks his company could actually grow despite the turmoil that a GM bankruptcy would cause. Some auto suppliers would go out of business because GM would cut production, but the strongest and most efficient suppliers would survive, he said. He thinks his company will be one of those.

Delphi Corp. might not be so fortunate.

Nancy Rapoport, a law professor at the University of Nevada-Las Vegas, told the Detroit Free Press that it’s likely that Delphi would have to liquidate its operations if GM filed for bankruptcy. The auto supplier has been in bankruptcy itself since 2005 and has been relying on GM to help fund its turnaround plan, which hasn’t found adequate financing.

Delphi, which used to be part of GM, has 750 hourly workers and nearly 900 salaried workers in the Mahoning Valley. Its Delphi Packard Electric division is based in Warren.

shilling@vindy.com