General Motors has been forced to close its Shrevesport, Louisiana facility due to supply problems associated with the Japanese disaster.
Citi analyst Itay Michaeli explains that it is likely this has to do with ties between Izuzu and this facility.
However, the Shreveport plant is unique in that it traces its history to GM’s past ties with Isuzu, who helped design the Colorado/Canyon years ago (GM sold its last Isuzu stake in 2006). While admittedly speculative, it is possible that the Shreveport facility sourced from the Isuzu supply chain and therefore faced more direct exposure into Japan.
But Michaeli doesn’t think this means that you should be confidence the rest of GM’s or other automakers supply chains will remain intact.
From Citi (emphasis ours):
Although the surprise timing of the GM Shreveport suspension may be explained by unique factors, our sense from automakers is that they have yet to fully grasp supply chain risks several days into the crisis. While industry predictions earlier in the week of a 30-50 day stock cushion may still be valid, the fluidity of the situation suggests that sporadic disruptions may occur. We do stress, however, that short-term production disruptions could be recovered and balance sheets should be far better prepared.
That likely means we could see some equity price volatility, as more confusing information about supply stoppages hit big automakers.
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