Daewoo To Resume Operation After Agreement With Suppliers

Autoparts Report, Sept 16, 2002

All three car assembly plants of Daewoo Motor Co. resumed operation after a key supplier of parts resumed shipments, the company said. Daewoo's car plants were idle for two weeks after Korea Delphi Automotive Corp. stopped supplying the parts Aug. 27 to protest unpaid bills totaling $16.7 million.

The plants reported a combined 150 billion won ($125 million) in lost production, equivalent to 20,000 cars. Korea Delphi resumed delivering parts after Daewoo, which is owned by its creditor banks, began paying some of the overdue bills, the automaker said in a statement. The parts maker supplies Daewoo with steering gear and other components.

"We have run out of our stock of cars. We will have to operate at our fullest capacity until next month to meet the orders," Daewoo said. Daewoo also promised Korea Delphi that it will pay a bill in cash within two weeks of the delivery of parts, the statement said.

The trouble at Daewoo Motor has raised concern that a prolonged suspension might jeopardize an agreement by General Motors to take over Daewoo Motor's passenger car assets. GM agreed in April to set up a joint venture with investors and Daewoo's creditors. The venture was supposed to get started by early October.

An association of 191 parts suppliers, which had also halted supplies, agreed that they would resume shipments. But Daewoo could not operate without Delphi products, which account for 20 percent of the automaker's externally supplied parts.

Korea Delphi, a joint venture between Delphi and former Daewoo units, makes brakes, steering and air-conditioning systems.