GM reviews UK as source for car components

The Financial Times reported that General Motors, the world's biggest carmaker, will consider reducing its dependence on the UK as a source for motor components in the wake of the dispute between Ford and KPMG, receivers for UPF-Thompson, which makes vehicle chassis for both companies.

Ford has threatened to stop production of its Land Rover subsidiary's Discovery model, for which UPF has been the sole supplier of about 70,000 chassis a year. The threat followed KPMG's demand for upfront payments of some £40m ($57m)to guarantee continued chassis supplies from UPF.

KPMG based its demand on a legal precedent set two years ago involving Transtec, another insolvent Ford supplier. A judge ruled at the time that receivers were entitled to exploit a customer's vulnerability as their primary responsibility was to pay creditors.

The components review by Vauxhall, GM's British subsidiary, arises from its dependence on UPF-Thompson as sole supplier of chassis for the Vauxhall Frontera sports-utility vehicle. The company, which makes about 10,000 Fronteras a year at Luton, is worried that a similar situation could arise with other sole suppliers.

"If we have to single source any components, this is a consideration we didn't have before in terms of where we source from", Vauxhall said.

It has meanwhile emerged that both manufacturers of Britain's famous 'black taxis', Manganese Bronze and Metrocab, use UPF as their sole supplier of chassis. Bentley Motor Cars, the Volkswagen-owned manufacturer of Bentley and Rolls-Royce luxury cars, also relies on UPF as a sole supplier for some components.

Vauxhall, Bentley and the two taxi makers said on Friday they were not facing imminent production stoppages. While none would comment on their respective talks with KPMG, they have apparently negotiated agreements for continuing supplies, at least over the next two to three months. "But we are definitely not happy," said Stephen Ferris, a director of Metrocab, which has been asked for a 50 per cent rise in payments by KPMG.

Land Rover has won a temporary court injunction forcing UPF to maintain supplies. However, it has already asked GKN to become an alternative supplier.

Vauxhall's review is unlikely to lead to any early contract-switching. Components contracts have already been signed for the new Vectra model shortly to go into production at Ellesmere Port. The next big round of contracts is not due until preparations start to replace the Astra family of cars from around 2004-2005.