GM Seeks Alternative Supply In China After Blast Kills Scores At Factory

  on August 03 2014 6:54 AM
General Motors Logo-Aug. 25, 2009
The General Motors logo is seen on a sign outside its headquarters at the Renaissance Center in Detroit in this file photograph taken Aug. 25, 2009. Reuters/Jeff Kowalsky/Files

(Reuters) -- The General Motors Co. (NYSE:GM) said Sunday it had requested its main Chinese supplier to find an alternative source of components after an explosion ripped through a factory killing at least 69 people a day earlier. The accident at the Zhongrong Metal Products Co. Ltd. plant in the city of Kunshan in the eastern province of Jiangsu was China’s worst industrial accident in a year.

Aside from the fatalities, some 200 people were injured in the blast, the state-run Xinhua News Agency reported Sunday, raising its casualty estimate from overnight.

According to Zhongrong’s website, the factory made wheels that are supplied to GM and many other carmakers. Distancing itself from Zhongrong, the Detroit automaker issued a statement saying it bought components from a company called “Dicastal,” with which Zhongrong works. GM went on to say it had no direct dealings with Zhongrong, which it described as a Tier-2 supplier.

Tier-1 component suppliers such as Dicastal are “required to source from Tier-2 suppliers who must meet both in-country environment and safety standards as well as quality standards,” GM said.

The U.S. automaker noted that Saturday’s accident did not cause any immediate impact on its production because it has “sufficient inventory” of the parts, without specifying what the components were. “We are working with our supplier to establish alternate processing capability,” its statement said.

The GM statement said it was “too early to determine the cause of the explosion” as an official investigation was under way. “We will closely monitor the investigation and, if asked, will provide any resources and information that can assist in this matter,” GM said.

The blast was reported to have taken place in a workshop that polishes wheel hubs. A preliminary investigation suggested it was triggered when a flame was lit in a dust-filled room, the local government said Saturday, describing the incident as a serious safety breach.

Xinhua reported that police took at least two company representatives into custody.

GM described Dicastal as one of its “global suppliers,” but did not provide any further information on the company. Asked if that Dicastal was Citic Dicastal Wheel Manufacturing Co. Ltd., a producer of aluminum alloy wheels headquartered in the eastern province of Hebei and a unit of Beijing-based Citic Group Corp., a GM representative in Shanghai said she did not have any information.

She also said she had no information about whether GM conducts safety inspections of production facilities run by lower-tier suppliers with which they do not do business directly.

(Reporting by Norihiko Shirouzu and Ran Li in Beijing; Editing by Simon Cameron-Moore.)

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