Buyer-supplier squabble threatens GM production
American Axle sues Republic Engineered to resume steel bar shipments
By Tom Stundza -- Purchasing, 6/15/2009 11:51:00 AM
Production of some General Motors vehicles will stop this week unless a steel bar supplier is forced to resume shipments to Tier 1 parts maker American Axle & Manufacturing. American Axle supplies GM and Chrysler but Automotive News and Crain's Detroit Business report it faces shutdown if a judge won’t compel a steelmaker to resume shipments that stopped on May 27.
“The clock is ticking and catastrophic damages are looming,” American Axle said in a lawsuit it filed last month in Oakland County, Mich., against specialty steelmaker Republic Engineered Products in Akron, Ohio. If Republic does not immediately resume shipments, American Axle’s production will be interrupted beginning this week, the suit states. Testing to approve a substitute supplier would take too long to avert a shutdown, the suit says.
Republic says it halted shipments because it was worried about its customer's viability in light of GM and Chrysler's financial distress, court documents show. Republic says it never received adequate assurance of its customer's health, which effectively meant American Axle had repudiated its long-term contract.
In its suit, American Axle accuses Republic of using the supply stoppage to get as much as $7 million in price increases and to make a binding commitment on how much steel the Detroit tier-one supplier will buy.
Last week, Purchasing.com reported that Bo Andersson, GM’s head of global purchasing, resigned.
A year-ago March, a strike by the United Auto Workers union strike at American Axle forced assembly cutbacks across the U.S. and Canada. The strike forced GM own six pickup and SUV plants in Flint and Pontiac, Mich.; Fort Wayne and Mishawaka, Ind.; Moraine, Ohio, and Oshawa, Ont., Canada.
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