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Ford's Ties With Supplier Harmed by Price Dispute

October 19, 2006|From Reuters

DETROIT — Ford Motor Co. said Wednesday that Collins & Aikman Corp. had halted parts shipments to a Mexico plant briefly in a pricing dispute, irreparably damaging ties between the automaker and the bankrupt auto interiors supplier.

Ford is reviewing all contracts with Collins & Aikman following the interruption, which forced the automaker to suspend production temporarily Friday at its plant in Hermosillo, Mexico, where it builds its Ford Fusion midsized sedan, a spokesman said.

"The relationship has been irreparably harmed," Ford spokesman Paul Wood said. He said the two companies had been negotiating for a few months on several issues, and Ford had no plans to cut off existing business for now.

Southfield, Mich.-based Collins & Aikman, which relies on Ford for about one-quarter of its annual revenue, said that it was hopeful the relationship would continue and that it was in discussions with all of its automaker customers over long-term agreements.

The shipments at issue included primarily instrument panels and other interior parts, Ford said.

Wood said the action by Collins & Aikman was because of several commercial disputes, including pricing.

"The stopped shipment occurred after Ford and C&A had reached agreement on about 90% of the commercial issues," Wood said. "It also occurred after Ford agreed to what we believe is a reasonable price increase."

Ford and other Detroit-based automakers have been pushing for deep price cuts from parts suppliers to improve margins. Ford is reducing the number of parts suppliers it uses but is signing long-term contracts with those that remain.

Collins & Aikman spokesman David Youngman said it would be inappropriate to discuss details on why shipments were stopped or what led to their resumption.

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