DETROIT -(Dow Jones)- Ford Motor Co. (NYSE:F) (F) confirmed Monday that it's taking a key parts supplier to court over a pricing dispute. It is the latest sign of tension between suppliers and auto makers over which party should bear the brunt of the financial difficulties plaguing the U.S. auto industry.
Accuride Corp. (NYSE:ACW) (ACW) said last week in a press release that it elected not to renew its contract with Ford after the auto maker decided to find another source for certain Accuride (NYSE:ACW) products over the next 12 to 18 months.
Accuride (NYSE:ACW) said it offered to enter into new agreements with Ford "to continue to provide product at an increased price and subject to mutually agreed terms and conditions," but Ford has filed a breach of contract lawsuit. Until the matter is resolved, Accuride (NYSE:ACW) will supply the products to Ford at increased prices.
The move comes a month after Ford supplier (CKCRQ) took the rare step of cutting off deliveries to Ford's Mexico assembly plant over a price dispute.
Accuride Chief Executive Terry Keating, in a statement last week, said the decision not to renew its contract with Ford "is consistent with our strategy to phase out marginally profitable businesses."
Accuride (NYSE:ACW) , Evansville, Ind., supplies a variety of components for commercial vehicles such as wheels, body and chassis parts and seats.
JP Morgan bond analyst Eric Selle wrote in a Nov. 3 research note that the issue is over a contract for steel wheels for Econoline vans and F-series pickup trucks.
Ford spokesman Paul Wood said Monday that Accuride's (NYSE:ACW) demand was " unreasonable."
"We were forced to go to court to protect our production as a result of Accuride's (NYSE:ACW) unreasonable price increase," Wood said.
Disputes between auto makers and suppliers, once normally settled in private, have become more public as the financial pressure on both sides has increased.
Ford is in the midst of a major overhaul of its North American operations and U.S. auto makers have traditionally obtained annual price cuts from suppliers. Ford reported a preliminary third-quarter net loss of $5.8 billion, or $3.08 a share, representing the company's largest quarterly loss since 1992.
But suppliers are facing their own difficulties. The loss of market share by the U.S. Big Three auto makers has lowered their revenue, while high costs for raw materials such as steel and plastic resin eat into margins. Several suppliers, such as Collins & Aikman, Delphi Corp. (NYSE:DPH) (DPHIQ), (TWRAQ), Dana Corp. (NYSE:DCN) (DCNAQ) and most recently Dura Automotive Systems Inc. (NASDAQ-NMS:DRRA) ( DRRA) have sought Chapter 11 protection.
Some suppliers have taken a harder line, which can affect the turnaround efforts at auto makers. Ford's Americas President Mark Fields said in September that the auto maker has pulled back from its goal of $6 billion in commodity cost savings by 2010 because so many of its suppliers are in Chapter 11.
Fields said Ford will achieve the savings a year or two later.
Last month, Collins & Aikman halted shipments to Ford's plant in Mexico that makes the Ford Fusion sedan, one of the auto maker's best-selling cars. The move temporarily shut down the plant over a Friday night and Saturday morning.
Shares of Ford were up 23 cents, or 2.7%, to $8.61 recently. Shares of Accuride (NYSE:ACW) were down 13 cents, or 1.1% to $11.81.
-By Terry Kosdrosky, Dow Jones Newswires; 313-226-1251; terry.kosdrosky@ dowjones.com
(END) Dow Jones Newswires 11-06-06 1338 Copyright (c) 2006 Dow Jones & Company, Inc.
