DETROIT -- Another large supplier has taken one of its suppliers to court to force continued parts shipment. Such lawsuits could become common thanks to high steel and plastic resin costs.
TRW Automotive Holdings Corp.'s Kelsey Hayes Canada subsidiary has sued FAG Automotive Inc. in Oakland County Circuit Court in Pontiac, Mich. FAG continues to ship the parts as the two companies try to resolve the issue.
FAG had threatened to stop shipping hub bearings to TRW's Kelsey Hayes plant in Ontario unless it received a price increase. TRW uses the bearings as part of a corner brake assembly for Ford Motor Co.
TRW of Livonia, Mich., balked at the price increase and sued to force FAG to deliver parts at the price it agreed to in the original contract. FAG Automotive is a subsidiary of FAG Kugelfischer AG of Schweinfurt, Germany. FAG's automotive center is in Troy, Mich.
The refrain is becoming familiar. Delphi Corp. of Troy, Mich., has sued a handful of suppliers, including Eaton Corp. of Cleveland, to force them to ship parts at original terms. The issue once was handled quietly, but the margin pressure from steel prices has forced smaller suppliers to be more aggressive, says an attorney who specializes in auto supplier cases.
"I think there's going to be a spate of this kind of litigation in the future," says Rodger Young, a partner at Young & Susser PC in Southfield, Mich. "Tier 2 suppliers are becoming more aggressive because they have no choice."