February 20, 2008

Courts Screw Chrysler, Side With Plastech

The courts have screwed not only Chrysler but have set a presidence with it's ruling.

A federal bankruptcy judge on Tuesday denied Chrysler LLC's request to take back its tooling from supplier Plastech Engineered Products Inc., saying the loss of Chrysler work would hurt Plastech's chances of successfully reorganizing.

The courts have basically set the rules saying that if someone wants to move their business all you have to do is declare bankruptcy and you will keep their business.

Screw free enterprise I guess.

In a 43-page opinion issued Tuesday, Judge Phillip Shefferly cited three main reasons for his ruling:

While Chrysler owns the tooling, Plastech possesses it. That "interest alone is sufficient" to deny the motion, Shefferly wrote.

The loss of Chrysler's business, some $190 million annually, would threaten Plastech's viability.

Chances of a Plastech turnaround would be nil. If Chrysler took immediate possession of its tooling, and shipments to other companies were interrupted, the judge wrote, "any prospect of an effective reorganization will be lost."

So even though Chrysler owns the tooling, possession is 9/10's of the law. And the Judge and Plastech say that if Chrysler takes their tooling they will go out of business. Maybe they should have thought of that before acting all high and mighty and screwing auto makers with their bad products. Quality actually means something now a days, maybe Plastech didn't get the memo.

Shefferly acknowledged Chrysler will be harmed by his ruling. He wrote that the automaker will suffer financially from continued bailout payments to Plastech and is at risk for supply disruption -- and therefore factory shutdowns -- if the supplier fails to deliver parts on time. Plastech provides parts for all Chrysler's cars and trucks. (emphasis mine)

The JUDGE acknowledges that Chrysler is getting screwed in this deal. Guess we know who contributed to that Judges campaign.

The ruling may embolden other suppliers to take a hard-line approach, said John Henke, a supplier consultant and president of Planning Perspectives Inc.

Now that suppliers know that the courts are mostly going to rule in their favor, they will start blackmailing the auto makers even more.

In todays automotive world only the strong will survive, if a supplier is days away from going out of business they need to look at their practices.

Posted by Quality Weenie at February 20, 2008 08:43 AM | TrackBack

Chrysler doesn't even own all of the tooling, they would have shot themselves in the foot for a second time in 2 weeks.
Nardelli needs to go back to buying nails and light bulbs from China.
Plastech did the Chrysler share holders a big favor!

Posted by: pete at February 20, 2008 01:19 PM

Nardelli is trying to break the UAW by cancelling all contracts with UAW suppliers.
He is already starting to outsource Chrysler tooling to China and eventually eliminate all of the U.S. Chrysler labor force and have everything made in China and Mexico. And then... sell the company for a huge profit.

Posted by: UAW Member at February 20, 2008 01:45 PM

You have no understanding of the law nor do you know how to interpret legal documents

Posted by: ME at February 20, 2008 02:41 PM

You have no clue as to what you are talking about.
The closest you came to a legal document is your suspended drivers license.

I work for Nardicky.
Chrysler DOES NOT own all of the tooling.
Go ahead prove me wrong! Come on, what are you waiting for???

Posted by: UAW Member at February 20, 2008 03:05 PM

We don't even own the assembly equipment, our plan...
have Mexicans assemble all of the components in Mexico or pay 50 million dollars to purchase them from plastech.

It is now better to take the buyout package from Chrylser while we are still in buisness than collect unemployment when that jackass losses everything like he drove Home Depot under Lowes.

Posted by: UAW Member at February 20, 2008 03:10 PM

UAW Member, are you talking to yourself? Because all the email addresses are the same.

And who in the automotive world doesn't think that Cerebus bought Chrysler so they could split it up, sell it and make money from it.

I don't blame Chrysler for wanting to pull out of Plastech. Plastech is horrible to work with and has horrible quality.

Bad quality costs alot of money, for both the supplier and their customer. If Plastech fixed their quality issues they wouldn't be in the place that they are in right now.

Posted by: Quality Weenie at February 20, 2008 03:28 PM

as a former plastech employee it is widely acknowledged that this day has been pending for a long time. plastech's efforts have relied heavily on squeezing their suppliers meaning not paying. the quality issues have always been there due to management negligence and nothing more.

Posted by: former big gun at February 20, 2008 07:03 PM

I don't know about any of the above arguements, but this ruling really irks me. It's more government sticking there noses in where it doesn't belong. And to put one company jeopardy because another company is incompetent is just plain assinine.

Posted by: Contagion at February 21, 2008 09:25 AM

One, the judge is way off. If Chrysler owns the tooling the judge had no right to deny them taking it back. Another example of a judge that allows his beliefs to get in the way of the law.

Posted by: Navy CPO at February 21, 2008 10:19 AM