Ford, FCA supplier faces insolvency; production of several models threatened

Gill Corp., a western Michigan stamping company that produces parts used by several automakers, is facing a financial insolvency that could result in an interruption of shipments to Ford, Fiat Chrysler and Toyota, according to a lawsuit filed by a key customer.

The financial problems led Gill to breach scheduling agreements, terminate shipments and make "ransom" demands from its customers before finishing other shipments, according to the lawsuit filed against Gill by German auto supplier Benteler Automotive Corp.

The suit, filed Nov. 8 in the 17th Circuit Court in Grand Rapids, Mich., contends that Gill has made extra-contractual financial demands and is planning to dissolve some operations, as first reported by MiBiz.

Gill manufactures component parts that Benteler incorporates into exhaust-system assemblies used in the production of the Chrysler Pacifica and Dodge Caravan minivans, the Jeep Wrangler and Gladiator, Ford Mustang and Toyota Corolla, according to court documents obtained by MiBiz.

This is the second major financial crisis that has gone public this month in the automotive supply chain. India-owned parts supplier Sakthi Automotive likely will liquidate its assets and shutter its operations in Detroit barring the emergence of a buyer, according to documents filed this month in U.S. District Court in Detroit. Representatives from Sakthi Automotive did not return phone calls on the matter, according to Crain's Detroit Business, an affiliate of Automotive News.

The lawsuit in Grand Rapids alleges Gill told Benteler that it was insolvent and "had entered into a short-term forbearance agreement with its lender and was in the process of selling off its plants and operations," MiBiz reports.

According to court filings, Gill is contractually obligated to provide parts to Benteler until at least 2038 via previous scheduling agreements, but Gill allegedly told Benteler it expects to close its Bond Avenue plant in downtown Grand Rapids by April 2020.

Benteler also alleged that Gill demanded the supplier sign a wind-down agreement as "ransom." The agreement included a ban on moving production of parts to other suppliers, additional payments to the company and price hikes for remaining work, according to court documents obtained by MiBiz.

The court documents also say Benteler sought a temporary restraining order compelling Gill "to continue supplying parts for a short period of time and then surrender tooling to Benteler."

"Unfortunately we cannot comment on open litigations," Yves Ostrowski, head of communications and marketing for Benteler Automotive, said in an emailed statement. "But we are happy to give a statement as soon as the case is settled."

A spokeswoman for Ford Motor Co. declined to comment on the matter. 

“We are aware of the situation and are monitoring," an FCA spokeswoman said in an email. "There has been no impact to production. As is our corporate policy, we will not comment any further on supplier issues."

Gill President David DeGraaff said in an email to MiBiz that Gill has reached a tentative agreement with Benteler. Gill did not immediately respond to a request for comment from Automotive News.

Benteler, based in Paderborn, Germany, ranks No. 34 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $8.1 billion in 2018. About 18 percent of the company's business is generated in North America.