Court gives equipment access to Chrysler
 

Chrysler LLC and General Motors Corp. secured court orders to remove their equipment from a Canadian parts supplier that went out of business, forcing the shutdown of two Chrysler plants in Canada.

Production of Chrysler 300, Dodge Charger and Challenger sedans in Brampton stopped Thursday and minivan plant production in Windsor has been shut down since Wednesday due to a shortage of brackets for engines and transmissions, said Chrysler spokesman Max Gates. He said the company was trying to find the parts at other plants to send to the Canadian assembly plants to get them back into production. He didn’t expect any other plants to be affected.

No GM assembly plants are expected to be disrupted, said GM spokesman Dan Flores.

Sources close to both automakers said Transcast Precision Inc. told them it was prepared to shut down or liquidate unless it received significantly higher prices for its parts.

Responding to that, Flores said, “GM will not tolerate the coercive behavior exhibited by Transcast.”

The supplier could not be reached for comment.

The dispute underscores the difficulties automakers face, including temporary production shutdowns, as a result of problems facing smaller suppliers.

The Ontario Superior Court of Justice issued the court orders, which allow both companies to reclaim their equipment and machinery.

Gates said the tooling will be moved to Chrysler’s casting plant in Etobicoke, Ont. The hope is the move can be done in less than a week.

Flores said GM is “in the process of securing the tooling and re-sourcing the work to other suppliers.”

The supplier is the former Solus Manufacturing Ltd., part of the H.E. Vannater Group of automotive suppliers. When Vannater ran into financial troubles, it was purchased by Transcast.

Bringing the work in-house is a “Band-Aid solution,” said Jim Gillette, director of financial services for CSM Worldwide in Grand Rapids.

The strategy provides an instant fix, but automakers are hurt in the long-run because suppliers typically do much of the research and development for the automakers.

There are no guarantees the tooling will provide the same quality or output after it is moved, Gillette said.

Meanwhile, negotiations between Chrysler and the CAW have lost some of their intensity on concessions required by the Canadian and Ontario governments as a condition of government loans pending the resolution of efforts by Chrysler to finalize an alliance with Fiat SpA.

The partnership with Fiat is a condition of the U.S. government in return for loans and must be complete by the end of the month. Success could yield an additional $6 billion in requested loans. Failure could result in Chrysler’s liquidation.



More...