Shutting Down over Requested Price Increase...

I

IEGeek - 2006

I would love to hear some thoughts on this,

Tier one automotive interiors supplier Collins & Aikman stopped shipments to its biggest customer, Ford Motor Co., last week for one shift in response to a pricing dispute between the supplier and the OEM. According to an Associated Press report, on Oct. 30 the company stopped shipping carpet, instrument panels and other plastic parts to Ford's plant in Hermosillo, Mexico, forcing Ford to shut down assembly lines that make the hot-selling Ford Fusion, Mercury Milan and Lincoln MKZ midsize cars. Collins & Aikman has a year-old plant with 800 workers next door to the Ford factory in Hermosillo.

The shipments resumed the following shift after Ford gave in and agreed to give Collins & Aikman the price increase it was after.

Pretty gutsy if you ask me...
 
I

IEGeek - 2006

Re: Shutting down over Price...

I thought it was interesting that Ford (the 600 lb. gorilla) succumbed to such pressure.

This could have a snowball effect...

When most companies are bending over backwards to satisfy their Big 3 customers, a little company takes them on and WINS.

I would assume that at the next contract review, things will be a little heated around the table.

Interesting to see how this plays out.
 
Manix

Manix

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Re: Shutting down over Price...

IEGeek said:
I thought it was interesting that Ford (the 600 lb. gorilla) succumbed to such pressure.
Click to expand...

Not at all, having a factory of that size next door to your customer, means you supply some pretty key parts in volume. Therefore what choice do Ford have? Even the most basic commodity could stop a Automotive Production line and the money Ford is losing due to the shut down will far out weigh the price increase.

I am interested to know how they got away without the dreaded "Line Stop Clause", and being charged 000's per minute the line was stopped. Has that all but eaten not only their profit on what they supply but also any extra margin they have achieved by the action they took.

Most suppliers would not dare pull this off for fear of the repercussions!:mg:
 
I

IEGeek - 2006

Re: Shutting down over Price...

I know (or heard through the rumor mill) that to shut down NUMMI costs a supplier $80,000 a minute.

The story never mentioned any of this, so it would curious to see how that came about as well.
 
F

fuzzy

Re: Shutting down over Price...

IEGeek said:
I would love to hear some thoughts on this,

Tier one automotive interiors supplier Collins & Aikman stopped shipments to its biggest customer, Ford Motor Co., last week for one shift in response to a pricing dispute between the supplier and the OEM. ...
Pretty gutsy if you ask me...
Click to expand...


Viva the revolution!!! Greenmail is such a powerful tool when weilded surgically...nothing different than what plays out daily at a lower $$ scale. Sorry Mr. Customer, I have nothing to ship to you today...oh, I just remember that roll / unit / pallet on NC...if you would just sign this waiver right here I could get that loaded on your truck at my dock straight-away. :notme:

Ford blinked but what could they do...I'm sure the resumption included a waiver of those penalties. C & A had a whole array of options at their disposal which would have leveraged Ford; I've worked for a Tier One that went Chapter 11 twice!! In a four year span!! Excrement happens...:2cents:
 
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