GM Sues Textron Fasteners Over Steel Price Hikes

Jason Sandefur

Seeking to avoid plant shutdowns, General Motors Corp. agreed to pay Textron Fastening Systems and other suppliers above-contract prices to cover skyrocketing steel prices, which have risen as much as 30% since January 1, the Wall Street Journal reports. However, GM has also filed a lawsuit to force those suppliers to honor current contract pricing.

According to the Journal, GM will pay TFS a 3% increase over contract prices. TFS had �threatened cessation of GM�s supply of steel fasteners,� court documents state. Troy, MI-based TFS supplies a significant portion of GM�s fasteners, giving it strong bargaining power with the automaker. Lending further urgency to the situation was the industry-wide push to �just-in-time� manufacturing, leaving GM with little inventory to strengthen its resistance to price hikes.

A weak U.S. dollar and rising demand for steel in China have boosted domestic steel prices in 2004. Steel costs are squeezing the Big 3 automakers, who are facing higher supplier prices but can�t pass the increase on to consumers in a tepid economy. Other carmakers have taken a tougher stance. Toyota Motor Corp. has threatened to terminate its contract with a U.S. auto-parts supplier that recently raised prices. Toyota is trying to re-source the component, the Journal reports. �2004 FastenerNews.com