Stellantis and a Canadian auto supplier are locked in a legal battle over the pricing of brake rotors, a conflict that could lead to the closure of several U.S. auto assembly plants. Peterson Spring, the supplier, claims it cannot afford to supply the parts to Stellantis at a price that it believes falls below its production costs at its Woodstock, Ont., facility. Stellantis’ attorneys argue that the supplier is demanding double the agreed price, amounting to a $77 million annual increase, and have labeled it as extortion. They warn that any disruption from their sole supplier would have significant repercussions, potentially halting operations at two Stellantis assembly plants in Michigan.
To address the issue, Stellantis has requested an Ontario court to appoint an independent entity to oversee the Woodstock facility and ensure the continuous supply of parts. Although Stellantis is exploring alternative options, finding a new supplier and getting the parts certified could take up to two years. The Automotive Parts Manufacturers’ Association of Canada has highlighted the vulnerability of the automotive supply chain, emphasizing the time and complexity involved in sourcing critical components like brake rotors.
Meanwhile, court documents reveal a complex transaction involving the sale of the Woodstock operation, with allegations of fraud against Patrick James, the founder of First Brands Group, the parent company of the supplier. Despite James denying the accusations, the deal for the Woodstock facility fell through, leading Peterson Spring, another company owned by James, to acquire the facility. Peterson Spring has raised concerns about selling the brake rotors below cost, citing the previous owner ZF’s ability to subsidize losses from profitable business areas.
Negotiations for a new rotor price began in late October, with Peterson Spring demanding twice the previous price agreed upon with ZF, backdated to July. Stellantis was warned that a halt in parts shipment by Peterson Spring could prompt the shutdown of its assembly plants in Michigan. A temporary agreement was reached on Oct. 28, with Stellantis making a lump sum payment of $7.2 million to ensure the continuous supply of parts until Nov. 17. Both parties declined to comment on the ongoing case, and efforts to reach a spokesperson for Peterson Spring were unsuccessful.
The dispute underscores the intricate and interdependent nature of the automotive supply chain, as highlighted by Flavio Volpe, president of APMA. Volpe emphasized the potential industry-wide impact of disruptions in the supply of critical components, especially in the context of trade wars and tariff threats.