When a bankruptcy court judge ruled that Chrysler could not strip bankrupt supplier Plastech of its proprietary tooling, it looked like the two were stuck with each other. And yet, a surprisingly short extension to their interim supply agreement signaled more conflict ahead… and here it comes. The latest supply contract is set to expire at midnight on Monday. The Detroit News reports that rather than extend it again, Chrysler will appeal the ruling and try once more to remove their equipment from the Plastech plant. In their court paper, ChryCo's lawyers postulate that "the court's decision may have significant implications for the way automakers and their suppliers do business in the future." True dat. And if Chrysler's appeal fails? Industry watchers say it could put Detroit's suppliers at a huge advantage over their customers… and potentially trigger another wave of supplier bankruptcies.
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This is what I don’t understand:
“Industry watchers say it could put suppliers at a huge advantage… and potentially trigger another wave of supplier bankruptcies.”
How can our law makers even pretend they are doing their jobs when a statement like this doesn’t set off all sorts of ruckus?
Seriously, bankruptcy should be a last choice option to help sort out a business failure by finding the most just solution for all involved. Instead, it’s a legal manuever to cheat your business partners.
* Landcrusher :
Seriously, bankruptcy should be a last choice option to help sort out a business failure by finding the most just solution for all involved.
Isn’t that exactly what’s happening? The manufacturers have beaten their suppliers to within an inch of their lives and now bankruptcy is their only option for survival.
It seems that the manufacturers have treated their relationships with suppliers as a zero sum game. They created a poisonous environment for their business partners and now the sums might just add up to zero for everyone.
^^^^
I’m sure it could *never* be a case of a supplier intentionally under-bidding another to land business, knowing they’ll strong-arm their customer into bailing them out when it goes bust.
Never.
Running a business according to the philosophy of always screwing over the other fellow never works in the long run and only when that stops will the Detroit 3 prosper. Everything I have read seems to indicate that the same piss poor F*** the other guy attitude rules the roost in Detroit but not with Toyota and Honda.
Sherman Lin :
It has worked for Wal-Mart..
pnnyj,
You missed my point. It doesn’t matter to me how badly these companies are treated by their customers. What matters to me is that these companies ARE NOT BANKRUPT. They are considering using bankruptcy protection only if they can use it as leverage, not because they can’t stay in business without it.