Thursday, June 25, 2009

Chrysler Asks Court To Force TRW Automotive To Supply Parts

DETROIT -(Dow Jones)- Chrysler Group LLC warned Thursday that a parts supplier dispute may force the auto maker to scuttle plans to resume production at all of its U.S. assembly plants Monday.

The auto maker has filed suit to force TRW Automotive Inc. (TRW) to honor its agreements and deliver a variety of parts - including child seat tethers, air bags and steering columns - to its plants, according to a court filing. The parts are used in the assembly of its Chrysler, Dodge and Jeep products.

TRW, based in Livonia, Mich., failed to notify Chrysler in writing by Tuesday that parts will continued to be delivered. The missed deadline triggered the filing of the complaint on Wednesday.

"Chrysler will be unable to operate many of its plants, causing thousands of people to lose their jobs and causing Chrysler substantial economic loss," the company said in its complaint. "For the same reasons, the public interest strongly favors issuance of an injunction."

The lawsuit highlights the importance suppliers play in the viability of car makers. The possibilities for disruptions in the flow of parts are expected to intensify as more U.S. parts makers file for bankruptcy protection amid the continued drop in demand.

Chrysler has been more aggressive with suppliers than its competitors. Last year it pulled contracts from Plastech Engineered Products Inc. over concerns of the company's financial status. Plastech subsequently filed for bankruptcy and later liquidated.

The auto maker wants a preliminary and permanent injunction directing TRW to take all steps necessary to comply with the auto maker's parts delivery schedule. The auto maker is also seeking legal fees and other costs. A court date hasn't yet been set, and the company didn't disclose how many plants could be affected.

The only signs of dispute between TRW and Chrysler were in May during the auto maker's bankruptcy process. Chrysler, which merged its assets with Italian auto maker Fiat SpA (FIATY), estimated it owed TRW about $27 billion in parts costs. TRW said the estimate was too low.

A TRW spokesman couldn't immediately be reached for comment. A Chrysler spokesman had no additional comment.

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