DETROIT (Jan. 16, 2009) — General Motors Corp. purchasing chief Bo Andersson told hundreds of suppliers Thursday that the auto maker will not lengthen the time it takes to pay them. But he also said that GM won't pay them any sooner, despite many suppliers' struggles to survive at a time when GM is slashing its vehicle production.
He assured them that they would continue to get paid.
"In the past GM has always paid suppliers on time," Andersson, GM group vice president for purchasing and supply chain told the group, "and our intention is to continue that practice."
GM said it will cut first quarter production 52 percent from year-earlier levels to 425,000 cars and trucks.
GM's payments terms range from 47 days up to 60 days.
Taking longer to pay suppliers would improve GM's cash flow, at a time when the auto maker is dependent on federal loans. But that would endanger suppliers facing a collapse in revenues due to GM's lower production.
Paying sooner would increase the financially troubled GM's cash burn but help suppliers.
GM had previously advised its suppliers in private of its plans not to alter terms and conditions. Andersson's comments this week were the first in a public setting, an industry source familiar with the discussions said.
His remarks followed an awards ceremony at the Detroit auto show honoring top GM suppliers.