After 70 years of doing business together, Chrysler and driveline supplier Dana appear headed for a nasty breakup. Automotive News [sub] reports that Dana has asked a U.S. Bankruptcy Court in New York to allow it to end its business with Chrysler by the end of this year. Dana, which recently emerged from a two-year bankruptcy, is not divulging the exact causes for the rift. Increasing material costs are said to be a major reason. Dana buys steel and supplies driveline components for Chrysler's Jeep products, as well as its Dodge Viper sportscar, Nitro SUV and Ram pickup. "Our goal is to establish a mutually rewarding supply agreement with Chrysler moving forward," says Dana Chairman John Devine, in a statement asking the bankruptcy court to uphold an earlier agreement between Dana and Chrysler. If negotiations break down, Dana will abandon its business with Chrysler. This latest supplier conflict comes on the heels of Chrysler's nasty divorce from its bankrupt interior supplier Plastech, and reinforces Chrysler's (somewhat undeserved) rep as a notorious supplier abuser. On the other hand, you can't squeeze blood from a stone, and Chrysler's financial situation hardly allows it to practice far-sighted largesse with its business partners. Rock, meet hard place.
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There goes most of the Jeep market.
Do any other axle companies still make Front Axles for lighter duty applications?
Well, why should Dana be different (than everyone else)?
Maybe they can start making new repro Dana 60s? They are damned hard to find.
Is that the same John Devine who was a finance domo at Ford & GM?
Scottie, I think if Chrysler survive long enough to make a switch from Dana axles, they could beg Mahindra & Mahindra for parts from India, since Mahindra manufacture Jeep clones (on a proper licence, paying Chrysler for the privilege, no doubt). Also Jeeps are manufactured in China, and anything made on planet earth can be reverse engineered there and manufactured to order in about 20 minutes flat.
Of course, the Chinese aren’t so great about actually designing, innovating, conceptualizing, or engineering products of their own. But they’re hell on cloning, stealing, copying and “borrowing” designs.
There is no guessing here as to what goes on. To those of you who were in any business not necessarily automotive, you would know what I will say to you.
You had great customers who you would do anything for to keep, you had middling customers who you humored because they filled in capacity for you, and you had deadbeat trouble maker customers who you would hope would leave on their own.
I remember a conversation with a commercial renter I had it went like this: He told me the business lately was terrible and he was not going to be able to pay the rent. (this after having a spoty reputation with this guy on getting rent late and feeling like a dentist on a good day with this guy ). I said look Joe, remember the great months you had, I was not your partner so I didn’t get extra rent those months.
Well I am still not your partner and I don’t want to share in your losses. Isn’t this what the Mfg. supplier situtation is all about? Didn’t many of these supplier companies come about because the car Mfg. who once owned them spun them off since they didn’t make money?
After these suppliers were independent, the Mfg. asked them to be their bankers of last resort: ie. accept payment on invoices 90 days down the road, Take less for the parts even though costs were going up or face loss of the account etc.
Now think, if Dana wants out, there is only one reason they are not making nor do they think they ever will make any money on the Chrysler business. As car buyers, do we want to buy cars made from bankrupt or captive company’s parts?
Chrysler is building their own rwd axel plant in Marysville, Michigan at a cost of $700 million. The plant is to open in 2010. Too much of a coincidence. Could there be more to this?
Never ending bad news from Chrysler. Even the suppliers don’t want to do business with Chrysler. Sales down ,Suppliers unhappy, low moral of workers, banks not willing to lend, leases stopped but hey Chrysler is ahead of it’s financial target? Come on Cerberus who are you kidding?
Bloomberg News states that Dana wants a BK judge to confirm that the current money losing contract with CerbChrylser is over at the end of the year. CerbChrysler maintains while its true that the contract expires on December 31st – its original purchase order should allow it to continue to pay the original price per unit.
It seems that Dana does not want to cut the cord with CerbChrysler completely. So, they may be selling other components which do make money for Dana.
CerbChrysler had its debt downgraded yet again, “further into junk territory” – welcoming them to the CCC+ Club.
I know Jeep can be sold to about anyone, but I’m still worried. I don’t need a new Jeep now, but I will later. It’s been nice that Jeep has had the other components from the Chrysler line. Such a shame…