Legal spat could delay GM's new Camaro
Nicolas Van Praet, Financial Post
Published: Friday, October 17, 2008
A legal spat between a General Motors Corp. supplier and a toolmaker could threaten the production launch next year of the automaker's Canadian-built Camaro sports car.


Cadence Innovation LLC is suing H. S. Die & Engineering Inc. over tools it needs to manufacture parts for GM's upcoming Camaro. The two-door coupe is a remake of the classic muscle car and one GM is counting on to help rekindle buyer interest in its lineup.

"It's a car they're really pushing to launch and bring back some of the shine to the Chevrolet name brand," said Jim Gillette, director of supplier analysis at CSM Worldwide. "H. S. is probably holding all the cards right now."

H. S. Die is demanding full cash payment before it hands over the tools and, as a result, is breaching its contract, Cadence said in a lawsuit filed on Tuesday with the U. S. Bankruptcy Court in Wilmington, Del.

Cadence counters that it is under no obligation to pay for the tools until 60 days after the car has been fully assembled and GM has approved the parts. It said that won't happen "for many months."

Without the tools, Cadence can't make and supply General Motors with the parts required for the launch of the Camaro, and the car can't be made, Cadence said in its lawsuit. The suit states that H. S. Die's refusal to turn over the tools could delay production of the vehicles by months if Cadence is forced to scramble to find an alternative sub-supplier.

GM is slated to build the Camaro at its plant in Oshawa, Ont. The car will undergo pre-production tests this year, with first deliveries expected next February. A GM spokesman could not be reached yesterday to comment.

Troy, Mich.-based Cadence filed for bankruptcy protection in the United States on Aug. 26, citing "collapsing revenue and material costs increasing at double digit rates" for its decision. Cadence said at the time it did not expect any disruption to the flow of product to its customers and that it intended to fund onging operations from debtor-in-possession financing used to supplement its working capital. It makes instrument panels, consoles and cockpits, among other products.

Grand Rapids, Mich.-based H. S. Die is likely worried about Cadence's ability to pay under the circumstances, Mr. Gillette said. It could ask GM to guarantee payment for the tools.

The Camaro situation adds further trouble for Canada's auto manufacturing industry, already under pressure from a rapid sales slide in the United States. Yesterday, Ford Motor Co. laid off 125 factory workers at its Oakville, Ont., assembly complex after it failed to get enough employees to take buyouts. Ford was targeting "upwards of 500 people" to leave to convert the plant back to two shifts, said company spokesman Kerri Stoakley.

"There will be further retrenchment in Ontario [at facilities of the Detroit-based automakers]," Kam Hon, an analyst at DBRS, said yesterday. "[But] they're not going to withdraw totally."