CORRECT: Chrysler Asks Court To Force TRW To Supply Parts
June 25 2009 - 2:35PM
Dow Jones News
Chrysler Group LLC warned Thursday that a parts supplier dispute
may force the auto maker to scuttle plans to resume production at
all of its U.S. assembly plants Monday.
The auto maker has filed suit to force TRW Automotive Inc. (TRW)
to honor its agreements and deliver a variety of parts - including
child seat tethers, air bags and steering columns - to its plants,
according to a court filing. The parts are used in the assembly of
its Chrysler, Dodge and Jeep products.
TRW, based in Livonia, Mich., failed to notify Chrysler in
writing by Tuesday that parts will continued to be delivered. The
missed deadline triggered the filing of the complaint on
Wednesday.
"Chrysler will be unable to operate many of its plants, causing
thousands of people to lose their jobs and causing Chrysler
substantial economic loss," the company said in its complaint. "For
the same reasons, the public interest strongly favors issuance of
an injunction."
The lawsuit highlights the importance suppliers play in the
viability of car makers. The possibilities for disruptions in the
flow of parts are expected to intensify as more U.S. parts makers
file for bankruptcy protection amid the continued drop in
demand.
Chrysler has been more aggressive with suppliers than its
competitors. Last year it pulled contracts from Plastech Engineered
Products Inc. over concerns of the company's financial status.
Plastech subsequently filed for bankruptcy and later
liquidated.
The auto maker wants a preliminary and permanent injunction
directing TRW to take all steps necessary to comply with the auto
maker's parts delivery schedule. The auto maker is also seeking
legal fees and other costs. A court date hasn't yet been set, and
the company didn't disclose how many plants could be affected.
The only signs of dispute between TRW and Chrysler were in May
during the auto maker's bankruptcy process. Chrysler, which merged
its assets with Italian auto maker Fiat SpA (FIATY), estimated it
owed TRW about $27 million in parts costs. TRW said the estimate
was too low.
A TRW spokesman couldn't immediately be reached for comment. A
Chrysler spokesman had no additional comment.
-By Jeff Bennett, Dow Jones Newswires; 248-204-5542;
jeff.bennett@dowjones.com