AKRON (June 13, 2014) — Much of the work General Motors Co. did to rebuild its business following its bankruptcy during the Great Recession may be undone with the ongoing string of recalls the auto maker has issued so far this year.
And worse yet, the auto parts suppliers that hitch their fortunes to GM’s wagon definitely will feel a negative impact as the domino effect takes place.
GM has issued 30 recalls so far this year affecting 13.8 million vehicles through May 23 and already has set aside $1.7 billion to cover the costs. But piled on top of the cash cost is the negative publicity of having Congress take the auto maker to task, along with the battering GM is getting across all media.
Since the Toyota recalls of four years ago, the federal government has put increased emphasis on safety and making sure car companies follow directives. While GM was slow to put its recalls in motion, other auto makers issued timely recalls over the same period for similar safety issues.
The last thing GM and its supply base need now is for the momentum that was built up in the recovery to disappear just as quickly. Many of those suppliers were hesitant to invest in new capacity to supply car sales that rebounded more quickly than economists anticipated.
But as time went by, many of those suppliers — knowing that overtime and extra shifts were a band-aid fix — started to shell out the capital to ensure their places as top suppliers in the renewed North American auto industry.
It might not happen right away, but as the recalls and negative press pile up, consumers may think twice about GM as a vehicle buying option. Just that hint of doubt about safety may be enough to sway them to another brand.
And the suppliers that count GM as their top customer could find themselves collateral damage once again.
This editorial appeared in Rubber & Plastics News, an Akron-based sister publication of Tire Business.
With the threat of more tariffs looming, how concerned are you about a trade war?
|Very. It could lead to another recession.||
37% (53 votes)
|It will be good for the U.S.||
19% (27 votes)
|It’s too early to tell.||
31% (44 votes)
|We have bigger problems than this.||
13% (19 votes)
|Total votes: 143|