2nd UPDATE: Chrysler, TRW Temporarily Resolve Shipping Dispute
June 25 2009 - 6:34PM
Dow Jones News
Chrysler Group LLC said TRW Automotive Inc. (TRW) has
temporarily agreed to continue shipping parts next week, clearing
the way for all the auto maker's U.S. plants to return to
production Monday.
The auto maker sought court intervention Wednesday to force 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.
A U.S. bankruptcy court judge postponed a hearing on the matter
until Tuesday, after TRW promised to continue shipping.
"With the encouragement of the bankruptcy court, TRW has assured
Chrysler that it will continue to ship the parts we need to resume
production on schedule," Chrysler spokesman Mike Palese said.
"Chrysler Group LLC is looking forward to returning our employees
and those of our suppliers back to work and to continue to work for
our mutual benefit."
Chrysler filed a complaint in New York after TRW, based in
Livonia, Mich., failed to notify Chrysler in writing that parts
will continued to be delivered. TRW had to file the notification by
Tuesday.
"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 of suppliers 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. Chrysler also is 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.
TRW spokesman John Wilkerson said the company is continuing to
ship parts to Chrysler and has no plans to stop.
-By Jeff Bennett, Dow Jones Newswires; 248-204-5542;
jeff.bennett@dowjones.com