Stellantis takes Ontario auto supplier to court over claims of extortion
CBC
Stellantis and one of its Canadian auto suppliers are battling in court over the price of brake rotors in a dispute that threatens to shutter multiple auto assembly plants in the U.S.
Peterson Spring says in a court filing it can’t afford to ship the parts to the automaker at a price it claims is below the cost to produce them at its facility in Woodstock, Ont.
Lawyers for Stellantis claim the supplier has threatened to stop shipping parts if the automaker does not pay twice the contracted price, equal to a $77-million US annual increase.
They argue that it's extortion, and any disruption from their sole supplier for the part would cause “massive and immeasurable” disruption, including idling two Stellantis assembly plants in Michigan.
Stellantis is asking an Ontario court to appoint an independent company to take charge of the Woodstock operation and order the continued shipment of parts.
Stellantis writes in court filings that it's attempting to find alternative options, but replacing the supplier requires new parts passing safety tests in a process that could take two years.
Canada’s Automotive Parts Manufacturers' Association (APMA) says the case demonstrates the fragile nature of the automotive supply chain.
“When [U.S. President] Donald Trump says, ‘I want to have everything sourced in the U.S.’ and his administration thinks it can happen overnight,” said APMA president Flavio Volpe, "here's a world-leading automaker saying that for a very simple part, a rotor, it would be minimum 24 months.”
Court documents reviewed by CBC News detail a complicated sale of the Woodstock operation that involves companies owned by a billionaire businessman who is now being sued on allegations of fraud.
Patrick James is the founder of First Brands Group, an American-based after-market parts company overseeing dozens of popular brands.
He resigned in October as CEO after the company entered bankruptcy proceedings in September.
First Brands Group is now accusing him of stealing billions of dollars from the company, which James denies.
The Woodstock facility was bought by a subsidiary of First Brands Group this summer, but the deal fell through.
That’s when Peterson Spring, also owned by James but not a subsidiary of First Brands Group, purchased the facility instead.
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