Quality Weenie

Courts Pile On Hate Bandwagon Of Domestic Auto's

The dispute between Chrysler and Plastech continues, with the courts still on the hate bandwagon.

Chrysler LLC will appeal a U.S. bankruptcy court ruling that prohibits the automaker from removing its tooling from bankrupt supplier Plastech Engineered Products Inc., the Auburn Hills automaker confirmed Monday.

Good luck with the appeal, but I don't think they will win anything. The courts have already proven they prefer that bad suppliers stay in business.

"Chrysler is appealing this decision because we believe there are substantial issues of law and equity that need to be addressed," Frazier said. "Moreover, we believe that the court's decision may have significant implications for the way automakers and their suppliers do business in the future."

Shefferly's Feb. 19 ruling stated that Plastech's rights under bankruptcy trump Chrysler's rights to its tooling. He wrote that the loss of Chrysler's work would severely damage Plastech's chances of a successful reorganization.

The judge says that the loss of Chryslers work will damage Plastech's chance of a re-org.

Seems to me that Plastech got themself into this mess and Plastech should be the ones to pay the price for crappy quality and bad business decisions.

And Plastech's bankruptcy is starting to effect their other customers too.

Last week, Johnson Controls Inc. -- Plastech's largest customer -- showed in court documents similar frustration over the supplier. The Milwaukee-based supplier filed a motion asking the judge to force Plastech to decide if it will or won't honor its contracts.

Plastech doesn't have to make that decision until they file their bankruptcy plans, which can take quite awhile.

So in the mean time, Johnson Controls is also left in limbo.

In the filing, Johnson Controls attorneys wrote that Plastech is "extracting" financial accommodations from its customer, meaning the company is paying above contract price for Plastech parts. On several occasions, Plastech has been bailed out by its customers by charging them more for parts.

Blackmail, plain and simple.

Plastech is being kept alive by extorting its customers for more money then their contracts specify. How is that legal?

But Johnson Controls doesn't have a leg to stand on considering how the judge ruled for Plastech and against Chrysler.

Posted by Quality Weenie at March 4, 2008 10:36 AM | TrackBack