February 10, 2009 - Faurecia - Chrysler, Detroit MI

Chrysler has unpaid bills, supplier says

French firm Faurecia sues seeking $110 million

Chrysler has unpaid bills, supplier says

French auto parts maker Faurecia has sued Chrysler LLC, claiming the automaker owes the supplier $110 million for engineering and research costs.

At issue are the expenses associated with interior parts made for the Chrysler PT Cruiser and Sebring, Dodge Avenger and Nitro and Jeep Liberty.

Research costs originally were baked into the price of each component. Faurecia expected to be reimbursed for research and development costs, and would have been, if Chrysler had met its volume projections.

When production was lower than the company had predicted and Chrysler did not raise the price of each component, Faurecia never was reimbursed as promised, the supplier claims in a lawsuit filed in Oakland County Circuit Court on Monday.

Chrysler, Faurecia claims in the lawsuit, "repeatedly confirmed that it has no intention of repaying or compensating Faurecia Interiors as it expressly agreed."

Faurecia makes seats, doors, exhaust systems and other automotive parts.

"Chrysler has not been served with this lawsuit and has not had the opportunity to study what it alleges. Therefore, it would be inappropriate to comment at this time," said Chrysler spokesman Michael Palese.

The dispute reflects the effects of falling volumes on suppliers, who not only are losing sales, but also are losing out on up-front development expenses.

Last year, for instance, production for the PT Cruiser was about 70% lower than the projections in the contract between the companies.

"Without necessary adjustments that Chrysler refused to make," through increased piece prices or other payments, "Chrysler's unilateral volume reductions have caused correspondingly dramatic shortfalls in Chrysler's payment of the amounts owed," Faurecia said in its suit.

The dispute is one of several that Chrysler has had with suppliers recently. Plastech Engineered Products Inc., immediately filed for bankruptcy after Chrysler canceled its contracts with the Dearborn supplier. Five months later, the company sold all of its businesses.

In the Faurecia lawsuit, the supplier also accuses Chrysler of handing over its research to a Chinese company.

"Unless and until Chrysler pays for such" engineering, research and development, the supplier said in court records, "Chrysler has no right to utilize it for its own benefit."

Original Story - Detroit Free Press