Eberspaecher North America's price dispute with a Tier 2 supplier won't affect its ability to receive parts, at least for now.
A federal judge in Detroit has ordered Nelson Global Products Inc. to keep providing exhaust system parts to Tier 1 supplier Eberspaecher until their contract dispute gets resolved.
In the meantime, Eberspaecher must deposit the price differential -- an estimated $940,000 a year -- into a court escrow account, U.S. District Judge Robert Cleland said.
Eberspaecher supplies exhaust systems for several automakers. General Motors, Mercedes-Benz and BMW vehicles use exhaust systems involved in the lawsuit.
The case was filed March 8 after Nelson threatened to cut off the supply of 15 parts as of April 1 unless Eberspaecher agreed to a price increase.
Eberspaecher's suit alleges that such a disruption could ultimately stop production of those vehicles using exhaust systems involved in the lawsuit, causing "assembly lines and workers at the OEMs to be idled" and creating "a cascading effect down the supply chain of suppliers and subsuppliers throughout the automotive industry."
Nelson, in turn, denied any breach of contract and counterclaimed, saying Eberspaecher failed to pay invoices on time.
The judge granted Eberspaecher's request for a preliminary injunction to ensure the continued flow of parts. A cutoff, he said, could produce "irreparable damage" for Eberspaecher, including loss of customer good will, manufacturer shutdowns and layoffs, and millions of dollars of liability to the impacted automakers.
Lawyer Steven Susser of suburban Detroit, who argued the case for Eberspaecher, said the two sides "are talking" but that a trial on a permanent injunction is likely "in the not-too-distant future," possibly September.
A lawyer for Nelson, James Rolfes of Chicago, said he could not comment on the case.
