Plastech Bankruptcy: Chrysler's Side of the Story

Robert Farago
by Robert Farago
plastech bankruptcy chrysler s side of the story

While we've taken Detroit to task for its lousy supplier relations (nose, face, spite, rhinoplasty, etc.), we finally get a look at the Plastech showdown from Chrysler's perspective. It's buried at the bottom of a Crain's Business Detroit article on their "Crain's Newsmaker of the Year" award to United Auto Workers' boss Ron Gettelfinger. After Big Ron wishes [unionized] Plastech well, we learn that "During court testimony last week, Douglas Doran, director of interior procurement, said Chrysler had been monitoring Plastech's financial condition for more than a year through Southfield-based BBK Ltd. BBK told Chrysler that Plastech was having trouble paying suppliers and had violated agreements with its lenders." And so "Chrysler twice participated in bailout agreements with other customers [GM? Ford?] over the past year, including in January when it contributed $10.7 million to help bail out Plastech. Chrysler attached conditions to each bailout agreement granting Chrysler the right to relocate its tools at any time." Yes, well, Chrysler acknowledged that Plastech has an additional $13.4 million of equipment for which the automaker didn't pay. Meanwhile, we hear that "Plastech's production quality was falling. In 2007, Chrysler issued 449 'quality tickets' to Plastech for 'non-conforming material.'" That's a lot of deeply worrying info, especially the bit about "other" supplier bailouts. Could this thing snowball? We shall see. [NB: Federal Judge Phillip Shefferly is set to rule on ownership of the disputed tools tomorrow, at 4pm.]

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  • GS650G GS650G on Feb 18, 2008

    If Plastech decides to dance with the devil they deserve what they get. Taking their money is like giving them keys to the factory. Big Ron is in a tough spot here. Should Plastech bite it how does he comfort the widows of all those workers and will UAW slaves at other suppliers feel good about their chances? they used supplier strikes to break the back of the Big 2.8 for years, notably the Saturn experiment.

  • Gardiner Westbound Gardiner Westbound on Feb 18, 2008
    Meanwhile, we hear that "Plastech's production quality was falling. In 2007, Chrysler issued 449 'quality tickets' to Plastech for 'non-conforming material.'" Does a "quality ticket" mean the components were rejected; or are hapless Chrysler owners driving them?
  • Domestic Hearse Domestic Hearse on Feb 18, 2008

    G. Westbound, To answer your question: "were the components rejected, or are hapless Chrylser owners driving them?" I believe I have an answer. At the Chicago Auto Show, the Chrysler/Dodge minivans were proudly on display (in all their plastic glory). Yes, the Chrysler minivan, once the savior of a dying Chrysler...and as history repeats itself, soon to be the savior of Chrysler yet again! Or not. See, Chrysler event staff at the show foolishly let the potential buyers actually touch the products on display. And so the Flip and Go seats were getting a rigorous workout, as was the backseat table. Shame that the plastic floor liners were actually lifting from their moorings. And plastic knobs and latches were coming off in people's hands (one embarrassed show attendee/minivan sampler stuffed a broken plastic bit in one of the van's cupholders and slunk off to the Mazda display, hoping nobody noticed. Too bad he believed that breaking a seat latch in the manner it was designed to be used was actually his fault, and not Chrysler's). At least it happened to him at the Auto Show, and not his own driveway. Wonder if he's gonna spring for the CX-9 instead? Hmmm.