The Wall Street Journal - 20.09.2019

THE WALL STREET JOURNAL. **** Friday, September 20, 2019 |B3

Bondholders are taking an-
other run at PG&E Corp.,
forming an alliance with vic-
tims of the wildfires that
swept through California in
2017 and 2018 to chart a path
out of bankruptcy for the
state’s largest utility.
Court papers filed by a
group of PG&E bondholders,
including Elliott Management
Corp., and by the official com-
mittee representing fire vic-
tims, asked for the green light
to put a chapter 11 plan on the
table that would compete with
the company’s own restructur-
ing framework.
PG&E has proposed a chap-
ter 11 plan that would cap the
amount owed to wildfire vic-
tims at about $8.4 billion, and
pay insurers and the people
who invested in insurance
claims stemming from the
fires $11 billion.
Bondholders have offered
improved treatment for vic-
tims, who are gearing up for
high-stakes battles with PG&E
to prove the amount of their
claims. Court papers say bond-
holders put the total value of
wildfire claims, including in-
surance, at $24 billion.
“The bondholders’ plan is
an attempt to pay themselves
more than they are entitled to
under the law and costs cus-
tomers billions of dollars,”
PG&E said in a statement. The
company noted it has settled
with holders of insurance
claims, and with Paradise, Ca-
lif., and other cities affected
by the blazes.
Bondholders must get court
permission to formally file a
competing chapter 11 plan, but
the announcement of an alter-
native to the company’s plan t
pay claims puts pressure on
PG&E to come up with a work-
able deal. A committee of fire
victims declined to comment.

BYPEGBRICKLEY
ANDKATHERINEBLUNT

PG&E

Creditors

Join Fire

Victims

supply the two GM assembly

plants nearby, according to

Todd Collins, who represents

many of those plants’ workers

as the president of UAW Local

724. He estimated that around
     75% of his local’s roughly
     1,800 members have been im-
     pacted by the strike.
     Nexteer Automotive , which
     makes steering components
     and has a plant in Saginaw
     County, Mich., informed work-
     ers on Wednesday that it
     would be temporarily reducing
     its workforce on account of
     the GM strike, according to a
     company statement.
     Nexteer didn’t provide spe-
     cifics on which plants might

be affected or how many staff

might be laid off.

Already there are signs that

the work stoppage is rippling

into the broader automotive

supply chain. A typical fin-

ished vehicle is made from

roughly 30,000 individual

parts manufactured by hun-

dreds of different companies,

and companies that provide

products to GM will them-

selves have networks of sup-

pliers.

Stripmatic Products Inc., a

Cleveland maker of suspension

and chassis components, sells

to other suppliers that provide

products to GM for their

pickup trucks and SUVs.

The company, which esti-

mates GM is responsible for

around 35% of its business,

first felt the strike’s impact on

its business Wednesday when

a GM-related order was

roughly halved.

Bill Adler, Stripmatic’s

president and chief executive,

said his company would likely

make changes to its planning,

if the strike continues for lon-

ger than a week or two.

“You always hope these get

resolved in a few days, not

weeks or months,” Mr. Adler

said.

The strike is having cross-

border implications as well.

GM said Wednesday that it

was temporarily laying off

roughly 1,200 workers at an

assembly plant in Oshawa, On-

tario, on account of a shortage

of necessary parts that would

come from the company’s U.S.

plants.

In the U.S., given the im-

portance of the automotive

supply chain to the Midwest, a

prolonged strike of more than

a month could have serious

implications for the region’s

economy, said Mark Zandi,

principal economist at

Moody’s Analytics.

“That’s a lot of jobs in the

industrial Midwest and likely

would tip the region into a re-

cession,” Mr. Zandi said.

BUSINESS NEWS

Companies that supply

parts to General Motors Co.

are being forced to idle plants

and lay off workers, as the na-

tional strike called by the

United Auto Workers

stretched into its fourth day.

Nearly 46,000 full-time GM

workers walked off the job on

Monday after the UAW and

GM were unable to agree on a

new four-year labor agree-

ment before the previous one

expired. As of Thursday after-

noon, talks were continuing

between the company and the

union, but the stoppage was

likely to enter a fifth day. The

strike is now the longest na-

tionwide strike against GM

since the 1970s.

By stopping all production

at GM’s U.S. plants, the strike

is beginning to affect the web

of manufacturers that produce

parts that go into the com-

pany’s cars. With no vehicles

being made, those companies

can do little but wait until the

strike ends, industry experts

say. Economists estimate that

every automotive assembly job

affects between five and eight

other jobs.

“When you don’t know

whether it’s going to last one

day or six months, it’s kind of

hard to make decisions,” said

Sheldon Klein, who works with

suppliers as the co-chair of the

automotive practice at Butzel

Long, a Detroit-area law firm.

“It goes right to the bottom

line for most suppliers.”

The companies most af-

fected so far are those that

operate on a just-in-time ba-

sis, delivering difficult-to-ship

parts like seats and door pan-

els to GM’s assembly plants

from factories located nearby,

said Michael Robinet, execu-

tive director of automotive ad-

visory services at IHS Markit.

Some of those plants have

already laid off their workers

temporarily or said they are

going to do so, as they reduce

or idle production because of

the continuing strike.

At least three companies

around Lansing, Mich., have

shut down their plants that

BYBENFOLDY

GM Supply Chain Starts to Suffer

Stripmatic Products, based in Cleveland, first felt the strike’s impact on Wednesday when a GM-related order was roughly halved.

ANGELO MERENDINO/THE WASHINGTON POST/GETTY IMAGES

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