Chrysler's standing by. At 4pm EST, a federal judge will rule whether or not the American automaker owns the tooling that makes the plastic parts they need to build cars. Should the court rule against bankrupt parts supplier Plastech and green light a Chrysler reclamation, a fleet of trucks are ready to swoop in, grab the tooling and whisk it off to other suppliers. According to Automotive News [sub], Chrysler has already signed letters of intent to relocate production with three of their other suppliers, with more sub-contractors "angling" for a piece of the Plastech pie. Wherever the toolings end up, ALL Mopar assembly lines will shut down while they're installing the equipment in its new homes– which could take as long as a week. Or… a year if Plastech's testimony to the judge is accurate. Which would kill Chrysler dead. If you're going with the former scenario, a shutdown could be a blessing in disguise; Chrysler's inventory levels are too high as it is.
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So how will we know if Chrysler has won this little dust up?
The question is: if they win, do they lose?
A part of me really hopes Plastech wins this one.
If I were a supplier seeing Chrysler do this to Plastech I’d be really hesitant to do any sort of business with them.
I dont think ive read into this particular case much but chrysler should own the tooling and i dont even know why this is going to court. Everytime any of the big 3 (or any automaker for that matter) source out a contract they always include tooling so that if every anything happens (like this case) or if they find someone that will do it cheaper, they can just take the contract to a different supplier.
so whats the difference here?
If I were a supplier seeing Chrysler do this to Plastech I’d be really hesitant to do any sort of business with them.
Seeing Chrysler do what? Bail them out twice, and stick with them even though they’re the source of the shoddy interior trim?
Who designed the shody trim in the first place?
And the stuff that we saw late last week makes me wonder…and Plastech asked Chrysler to pay up front. Why would a company ask them to pay up front unless they have a history of late pays?
Why would a company ask them to pay up front unless they have a history of late pays?
Obviously because they’re broke and needed the money.
My wife works in a credit department. If their customers end up late paying too often it becomes COD.
Somehow, I don’t see this as apples-to-apples.
Not apples to apples, but if someone is paying late consistently, I’d certainly move them to cash on delivery or no parts. At this point they have little more to lose anyway.
@paulpita07:
You raise a really good point. The issue is in bankruptcy court in Michigan, where Chrysler is asking the court for permission to remove the tooling from the factories. Chrysler can’t just send in the movers and carry the tooling out (even if Chrysler officially owns the tooling) because it is under contractual use by Plastech and because there are other weird bankruptcy law concerns.
So, it is not so much that they dispute who owns the tooling and it went to court. Rather, it is about getting the court’s OK for transactions with a company engaged in some level of bankruptcy proceedings.
Let me ask a question of those that are more informed in this matter than I am–
How could this be a Cerberus problem if they’ve only owned 80% of the corporation for 6 months?
If Chrysler was so late, so often as to shut-down it’s largest plastics manufacturer– logic tells me it’s because Father Benz was too busy syphoning off money for Mercedes’ restructuring and just wasn’t leaving enough in Ma Mopar’s purse for her day-to-day to happen.
Heh… “Plastech”…
How fitting.
So, what happened in the courts – did Chrysler get the tooling?
Edward Niedermeyer’s Plastech post just went up. Sorry for the delay.