Global Fastener News

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