Stellantis, suppliers take over tooling from bankrupt supplier

Stellantis NV and a pair of tier one automotive suppliers have been granted permission to take over the tooling from a bankrupt supplier to avoid "enormous losses" from shutting down vehicle assembly lines.

The automaker, along with Adient plc and Yanfeng Automotive Interior Systems, was given relief late last week in U.S. Bankruptcy Court for the District of Delaware from an automatic stay on the assets of Unique Fabricating NA Inc.

The Auburn Hills, Mich.-based supplier of plastic, rubber and foam components filed for a Chapter 7 liquidation Thursday, resulting in the closure of all its plants and termination of all employees. Stellantis, Adient and Yanfeng own the tooling in Unique's factories, according to lawyers who successfully filed a motion to retain it during the bankruptcy proceedings.

"The Debtors have commenced Chapter 7 cases and have ceased operations, thereby jeopardizing FCA US's ability to continue assembling vehicles in North America especially if the tooling cannot be removed and used by alternative suppliers to manufacture parts for FCA US," the motion said, referring to the automaker's previous name Fiat Chrysler Automobiles.

Unique disclosed in April it was facing insolvency after falling into default with its lender Citizens Bank NA, marking the beginning of the supplier's demise. In May, GM, Stellantis and Yanfeng agreed to bail out Unique Fabricating with price increases and investment of up to $15 million to tide over the company. It is unclear what role production stoppages due to the United Auto Workers strike may have played in preventing the supplier from regaining its footing.

Stellantis declined to comment on the bankruptcy case. GM spokesman Kevin Kelly said the automaker is monitoring the situation but does not "expect there to be a material impact to our overall operations." James Plemmons, attorney at Detroit-based Dickinson Wright PLLC representing Stellantis, Adient and Yanfeng in the case, also declined to comment.

The case offers a glimpse into the relationship between automakers and suppliers, underscoring the interdependency of the supply chain and how quickly it can collapse. The equipment at Unique's plants is the only set of tooling that exists to make certain parts for Stellantis, lawyers said in the motion. Unique was Adient's "sole source supplier for myriad critical automotive parts" and Yanfeng's sole source supplier for "more than 200 critical automotive parts."

"In order to avoid a potentially devastating shutdown of FCA US's manufacturing plants, it is necessary for FCA US to reclaim the tooling as soon as possible," the motion said.

Unique's contract to supply Stellantis started in December 2020. The supplier, which went public on the New York Stock Exchange in 2015 at $11 per share, has lost essentially all of its share value. NYSE American LLC announced Thursday it initiated proceedings to delist the company from the stock exchange in light of the bankruptcy.