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GM $4.5B Safety Net to Avoid Parts Shortages

Wall Street Journal US Business •
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General Motors, stung in recent years by critical parts shortages, is setting up a $4.5 billion safety net designed to keep critical components flowing through supply-chain troubles. The automaker aims to avoid future parts crunches by securing supplies of high-risk components through a financing arrangement where it pre-funds the purchase of essential parts.

The move, which GM disclosed Tuesday in a regulatory filing, aims to give suppliers enough capital to maintain production and potentially stockpile parts. GM in turn can keep its assembly lines moving amid supply-chain disruptions, without tying up large amounts of capital.

General Motors Chief Executive Mary Barra has pledged to remake GM’s supply chain and create a system more capable of managing disruptions. The auto industry in recent years has been stung by supply chain disruptions. The $4.5 billion safety net is designed to avoid similar parts shortages in the future.