General Motors just signed a deal worth up to four-point-five billion dollars to secure automotive parts. The deal exists because GM spent years forgetting that cars require parts to function. Revolutionary stuff.
The press release calls this a supply chain solution. That's what we're calling it when you pay someone to promise they'll sell you the things you need to make the things you sell. GM has reinvented the concept of buying supplies. They held a meeting. Hired consultants. Ran the numbers. Determined that having parts is better than not having parts.
This comes after years of global automotive supply chain issues. Years. Plural. Multiple trips around the sun during which the largest car manufacturers on earth could not figure out how to obtain the components required to build cars. These are the same people who engineered vehicles that drive themselves. But sourcing a semiconductor proved too complex. They can program a computer to parallel park but they can't program their procurement department to order chips before they run out.
Retail traders saw this headline and immediately started Googling which parts supplier got the contract. They're building spreadsheets. Calculating multiples. Convinced they've found the next ten-bagger because GM finally agreed to pay for inventory. Your cousin Derek is already in the group chat explaining why this validates his thesis on industrial distributors. He bought calls yesterday. He will lose money tomorrow.
The deal is worth up to four-point-five billion. Up to. That means it might be less. GM has given itself permission to spend less money if it decides parts are optional again. They've built in flexibility for the next time they forget how manufacturing works.
Somewhere a CFO is explaining to shareholders that spending billions on parts represents forward-thinking leadership, and somewhere else a day trader is explaining to his wife that the Robinhood account is technically still open.
Photo by Julia Taubitz on Unsplash
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