By on February 5, 2008

jf_08avenger_dashangle.jpgIt looks like Chrysler got out the old checkbook and paid Plastech some money to ship the damn parts already. USA Today reports nothing more than the fact that the two companies are doing business again, which should result in a production restart at Chrysler's four idled factories and two de-accelerated plants within a few days. Automotive News [sub] says it's strictly an interim affair; the deal only runs through Feb. 15. So the fat lady ain't singing. More accurately, the fightin's in 'rounds. Just as Delphi bedeviled GM for years, this dispute will go through several more permutations before it's done. Even if you don't factor in lawyer's fees, this little "spat" has already cost Chrysler millions. More importantly, one wonders what effect Plastech's insurrection's had on Chrysler's other suppliers. Will they be more willing to go to the mat when Chrysler comes calling? Count on it. Chrysler's ability to do business with its suppliers just got a whole lot tougher. 

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19 Comments on “Plastech Cuts a Deal with Chrysler: SNAFU...”


  • avatar
    Lichtronamo

    The outcome is almost a let down after the build up that something more immediately catastrophic would happen.

  • avatar

    Lichtronamo:

    It ain’t over yet.

  • avatar
    Lichtronamo

    Looking forward to the Podcast, RF.

  • avatar
    windswords

    Darn, I was so pumped for this!

    Now I feel like the barbarians/pirates etc. in those Capital One credit card commercials.

  • avatar
    Alex Rodriguez

    It’s not over yet, but Chrysler is not declaring bankruptcy in days either as was speculated here.

    There is some hardball being played on both sides, but both sides also know that bankruptcy is the worst case scenario. They will find a way to work it out in the short term while they discuss long term options.

  • avatar
    Landcrusher

    “Hardball” doesn’t quite cover it. The posts about pirates and raiders are spot on. It would be less immoral if these guys really did pull out the guns and knives.

    What a real shame that this goes on in our country. Supposedly, states no longer have the right to secede, but couldn’t we still kick one out?

  • avatar
    shabatski

    Landcrusher, am I missing something? Which state would you like to kick out over Chrysler’s inability to pay their suppliers?

  • avatar
    Gardiner Westbound

    It’s brinkmanship. Cerberus blinked first.

  • avatar
    Lichtronamo

    It doesn’t make sense that Cerberus would blink first given that they triggered the issue by canceling the contract.

  • avatar
    mallthus

    Proof that running a car company is a lot different than running Home Depot.

    If you get in a fight with your bankrupt hammer supplier, you can buy hammers from someone else.

    Little interruption to the supply chain, no interruption to consumers and very little change in anything but in-store signage.

    Fire a vendor with few competitors making a custom product with sunk tooling costs and your world starts to go pear shaped pretty quick.

  • avatar

    windswords,

    Which part were you excited for? The supplier’s bankruptcy and job losses, or Chrysler’s bankruptcy and job losses?

    I make fun of Chrysler and their crappy interiors as much as the next guy – if not more – and it’s one thing to point out idiotic decisions among the Big 2.8’s management. But actively rooting for a catastrophic battle seems to be in bad taste, IMO.

  • avatar
    jazbo123

    I too don’t understand glee at the prospect of American jobs and a piece of Americana being lost forever.

  • avatar
    Rix

    The Big 3 have been improving their cash flow by paying their suppliers later and later. Essentially, this pushes working capital costs onto the suppliers. I think this is the end of that process. The big-3 have finally stiffed a supplier so much that they went out of business. Who can afford to run a business where you get paid 90 days late? That’s 90 days of sales you have to cover out of your working capital expenses.

    Conserving cash is probably pretty necessary right now, but they pushed their suppliers to the wall. I think this is probably the end of domestic cost cutting- when suppliers finally realize that there is no more profit in sight and just close down. I think probably the automakers wouldn’t mind this in the long term but in the short run it will be a bumpy ride as domestic parts continue to be outsourced to lower wage countries.

  • avatar
    Landcrusher

    Shabatski,

    That would be Michigan. Shame too. Nice place before they were taken over.

  • avatar
    windswords

    ChrisHaak:

    I know it’s diffilcult to detect sarcasm in web postings. But I thought it was plain what I was trying to say. Unfortunately you were not the only one to misread this. I didn’t mean to say I was hoping for anyones jobs loss, but I added the line “I was so pumped for this” because another poster misunderstood my line about barbarians and pirates as a description of the harball tactics the two parties were employing on each other.

  • avatar

    Getting paid 90+ days later seems to work for doctors and the insurance companies. Hell, my dental insurance doesn’t pay for over 6 months and 2 submissions for cleaning and exam work, the fuckers. My dentist has billed me twice because they got no reply and had to resubmit to he insurance.

  • avatar
    Ryan Knuckles

    Rix:

    Anyone that does business with Wal-mart has atleast that much delay in payment. Its hard to pity any company that follows this practice.

  • avatar
    GRAMMY

    WELL CHRYSLER
    YOU THINK IT MIGHT BE TIME TO PAY YOUR BILL????????
    PLASTECH IS NOT LOOKING FOR A HAND OUT FROM YOU!!! IT MIGHT BE NICE IF YOU PAID FOR ITEMS YOU GET LIKE THE REST OF US HAVE TO DO.

  • avatar
    mykeliam

    Hmmmm…..
    I wonder if the shutdown helped to cut the excess capacity that Chrysler has sitting on lots any where??

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