Strike at supplier could bankrupt GM

General Motors made an urgent attempt yesterday to shore up investor confidence after its shares dipped to their lowest level since the stock market crash of 1987. They fell on mounting fears that a possible strike at GM's main parts supplier might push the world's largest car maker into bankruptcy.

The beleaguered company is facing a new crisis after Delphi, a parts maker which declared bankruptcy last month, said talks had broken down with the United Auto Workers' union over pay cuts. If no deal is reached, Delphi workers might strike, leaving GM unable to manufacture cars.

Several analysts published research notes saying that if Delphi workers stayed out for three months, GM could burn through its $19.2bn (£11.2bn) cash pile and be forced into bankruptcy. Rick Wagoner, GM's chairman and chief executive, responded by writing a letter to GM's 325,000 employees saying speculation the company might have to file for Chapter 11 bankruptcy protection from creditors was "just plain wrong". He added that GM's management was implementing a plan to stem the company's huge losses and revive car sales, especially in its key home market.

Fresh uncertainty about GM's future has added to pressure on Mr Wagoner. He enjoys the support of the board but is reportedly meeting directors weekly rather than monthly. Mr Wagoner also faces increasing pressure from the billionaire financier Kirk Kerkorian, who bought a 9.9 per cent stake in GM this year. Mr Kerkorian has lost almost half a billion dollars on the value of his holding and is thought to be pressing for a seat on GM's board.

GM shares regained ground in the afternoon after falling to $20.60, the lowest level in 18 years.