GM lawsuit accuses Goodyear of cutting tire shipments
DETROIT – General Motors Corp. has sued Goodyear Tire & Rubber Co., claiming the tiremaker is improperly withholding some shipments in a dispute over prices, threatening the world’s No. 1 automaker with “catastrophic, irreparable losses.”The suit was filed Monday in Macomb County Circuit Court in the Detroit suburb of Mount Clemens. GM’s global purchasing and supply chain operations are based in nearby Warren.”Cessation of shipment of Goodyear products will result in catastrophic, irreparable losses to GM, potentially to almost every GM North American assembly plant,” GM said in its filing.Goodyear supplies more than 8 million tires a year to GM, which sold 9.2 million vehicles worldwide in 2005.Goodyear spokesman Ed Markey said his company had read GM’s court filing, although it had not yet been served with it.”Goodyear believes that the complaint is unfounded and mischaracterizes the current relationship between Goodyear and General Motors,” he said in a prepared statement. “Goodyear is supplying tires to GM on valid contracts.””This disagreement is limited in nature, and Goodyear is within its rights relating to all actions taken,” Markey said. “We are disappointed that GM has chosen this response, and we are currently in discussions, remaining hopeful that the matter will be resolved amicably.”GM spokeswoman Deborah Silverman declined to elaborate on the dispute Wednesday.GM said in the suit that Goodyear demanded the automaker pay “substantially higher prices” than those set in its contracts and refused GM’s offer to make the payments under protest while the dispute was resolved.The cutoff of those tire deliveries will prevent GM from starting production at its new Delta Township assembly plant near Lansing, Mich., and halt production on one line at the Flint Assembly plant, GM said.The move could cause layoffs at those plants and “a ripple effect on GM dealers and other suppliers, lost profits on the sales of GM products, and damage to GM’s reputation and goodwill,” the automaker said in the complaint, first reported in The Macomb Daily of Mount Clemens.GM asked for a preliminary injunction requiring Goodyear to honor its supplier contracts. The case was assigned to Chief Judge Peter Maceroni. There was no record of a hearing being scheduled, the court clerk’s office said Wednesday.”Between the manufacturers and suppliers today, it’s really hardball,” said auto analyst David Cole. “That certainly applies to GM and Goodyear.”There have been similar disputes between GM and other suppliers, said Cole, director of the Center for Automotive Research in Ann Arbor. Suppliers find themselves caught between the rising cost of raw materials and customers determined to hold down the prices they pay.Petroleum prices have been going through the roof, and oil is a big component in making tires.Detroit-based GM accounted for 14.2 percent of worldwide auto sales in 2005. It employs about 327,000 people and makes vehicles in 33 countries. GM lost $8.6 billion last year on sales of $192.6 billion.Goodyear is based in Akron, Ohio, and makes tires, engineered rubber products and chemicals in 29 countries. It has about 80,000 employees. Goodyear earned $228 million in 2005 on sales of $19.7 billion.—On the Net:General Motors Corp.: http://www.gm.comGoodyear Tire & Rubber Co.: http://www.goodyear.com
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