Judge orders Lear to keep supplying DaimlerChrysler | VailDaily.com

Judge orders Lear to keep supplying DaimlerChrysler

DETROIT – A circuit court judge has ordered Lear Corp. to keep supplying automaker DaimlerChrysler AG with a steady stream of seats and interior trim for the time being even though the parts maker has argued that higher oil prices have driven its costs sharply higher.Oakland County Circuit Judge Colleen O’Brien issued a temporary restraining order Thursday in a rare example of an automaker taking a supplier to court to force compliance with their contract. She set a Dec. 14 hearing on whether to extend the order.DaimlerChrysler said it was the first time it has sued a supplier, and Lear said it was the first time it has been sued by an automaker.Jim Gillette, a supplier analyst with the consulting firm CSM Worldwide, said Friday that suppliers have been asking automakers to pay more for their parts because of the high cost of raw materials such as steel, and in most cases automakers have quietly agreed to pay more.Lear said its problem is the rising cost of oil, which is used to make resin for plastic parts.Lear informed DaimlerChrysler it would absorb those increases for one month but would transfer the increases to DaimlerChrysler after that. The supplier also said it would stop shipping parts to DaimlerChrysler, according to the lawsuit.DaimlerChrysler said it depends on Lear parts and would lose $54 million per day if Lear stops shipments. The Stuttgart, Germany-based automaker said it would have to close 12 plants in the United States, Canada, Mexico and Germany within two days if the shipments end.”It’s really to protect us from production disruption,” DaimlerChrysler spokesman Markus Mainka said.Lear spokeswoman Andrea Puchalsky said the company hasn’t made a profit in its plastics business for six months.”Right now we’re facing an unprecedented raw material pricing environment,” Puchalsky said.DaimlerChrysler said its contract with Lear through the 2006 model year prevents Lear from raising prices.Puchalsky said Lear claimed in court papers that it doesn’t have to follow the contract because DaimlerChrysler unilaterally imposed price reductions on Lear in September. DaimlerChrysler denies that.DaimlerChrysler shares fell 28 cents to $50.70 in afternoon trading Friday on the New York Stock Exchange.—On the Net:DaimlerChrysler AG: http://www.daimlerchrysler.comLear Corp.: http://www.lear.comVail, Colorado

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