Stellantis Sues Yet Another Supplier For Withholding Parts

Stellantis has filed a lawsuit against Spectra Premium Mobility Solutions Ltd., a Quebec-based supplier of fuel tanks. The dispute centers around fuel tanks for the Chrysler Pacifica Hybrid plug-in hybrid (PHEV) minivan, a popular vehicle produced at the Windsor Assembly Plant in Ontario, Canada.

Earlier this month, Stellantis took legal action after Spectra threatened to halt shipments unless a 12.5% price increase, retroactive to January 1, was agreed upon. The lawsuit, filed in Oakland County Circuit Court in Michigan, highlights the potential production stoppage resulting from the lack of fuel tanks, jeopardizing operations at the Windsor Assembly Plant.

Production Impact and Legal Proceedings –

The Windsor Assembly Plant, responsible for producing 350 minivans weekly and aiming to increase output to 750 per week later this year, faced a looming shutdown. An Oakland County judge, however, denied Stellantis’ request for a temporary restraining order to compel Spectra to continue supplying parts at the original contract price. As a result, it remains uncertain how much production has been impacted.

Stellantis has warned of severe repercussions, including significant layoffs and substantial financial losses, due to production shutdowns caused by supplier disputes. Historically, the company has avoided long-term disruptions by securing court injunctions or paying suppliers under protest.

Context of the Dispute –

This lawsuit against Spectra is the fourth legal dispute Stellantis has initiated against its suppliers this year. While pricing disputes are not uncommon in the automotive industry, it is rare for automakers to sue their suppliers. Recently, tensions between Stellantis and parts manufacturers have escalated due to the automaker’s aggressive cost-cutting measures and focus on reducing supply costs.

In previous lawsuits, Stellantis argued that production shutdowns would have dire consequences for the automaker and the supply chain reliant on Pacifica. The company emphasized that the economic impact of a large-scale automotive industry disruption is massive and immeasurable.

Judicial Decisions and Industry Implications –

Judge Victoria Valentine’s decision to deny the restraining order against Spectra deviates from her prior rulings in similar supplier disputes. In previous cases, Valentine granted injunctive relief for Stellantis against Yanfeng, a supplier of seating and interior components, including electronics produced on a just-in-time basis, and Kamax, a manufacturer of high-strength fasteners, where Stellantis claimed significant financial losses. However, there was no reason for her differing ruling in the Spectra case.

This decision represents a setback for Stellantis, which has consistently turned to the courts to shield itself from supplier demands for higher prices. The automaker maintains that its suppliers are bound by agreed-upon contract terms, even when economic conditions become unfavorable. In contrast, suppliers argue that supply agreements should not be considered enforceable requirement contracts, given the changing economic landscapes.

In another related case, Oakland County Judge Michael Warren also denied Stellantis’ request for a preliminary injunction against MacLean-Fogg, a supplier of pinions and gears to two Stellantis plants in Kokomo, Indiana. Stellantis continues to pay MacLean-Fogg under protest to maintain production while the legal proceedings continue. After indicating that Stellantis might prevail on the merits, MacLean-Fogg’s attorneys moved the case to federal court, further complicating the ongoing dispute.

Source: Automotive News