Automotive

Automotive Suppliers: Our Perspective

Automotive suppliers’ ability to adapt quickly is being tested now more than ever before.  Suppliers that survived the reduction of the supply base during “Great Recession” and then prospered by becoming more efficient and lean are now jeopardized by conditions that literally change daily as well as the shift from ICE to EV.

Not only do suppliers now contend with reduced volumes-they must do so with little ability to plan as OEM’s allocate scarce chips to profitable vehicles stopping and starting production while dealing with supply chain weaknesses that often cause instant material shortages, increasing material costs, and increasing labor costs and staffing issues (especially at the tier 2 and 3 levels where liquidity is often less available. Even if volumes do get back to pre-pandemic levels by 2024, this is a long time for suppliers to manage liquidity, especially with an environment of increased interest rates. Coupled with these short-term issues, the OEMs have accelerated the move to EV. Over 200 EV launches are planned by 2028, including 97 new vehicles. The OEMs stated timeline for the transition continues shorten.  

For suppliers, these dynamics make maintaining production and cash flow difficult and planning almost impossible. However, auto suppliers have demonstrated time and time again that they are resilient. These conditions, as well as inevitable unanticipated new conditions, will create supply and liquidity issues, as well as consolidation.  However, they will also result in opportunities. Change always creates winners and losers.

For over four decades, we have been actively engaged in helping suppliers win by adapting and benefiting from the rapidly changing issues ever present in the automotive industry. Our strategic position in the Midwest gives us unparalleled proximity to suppliers and manufacturers that are the lifeline of your business. We understand the industry specific needs of OEMs, suppliers, tool makers, dealers, lenders, employees, vendors, advisors, media, and government officials, and can use their needs to your benefit.

 

Automotive Suppliers

As a business advisory and advocacy law firm, the scope of services we provide to automotive suppliers is vast - from helping clients in short and long term strategic planning, negotiating contracts and resolving disputes without litigation, litigating disputes when it’s the best option, registering trademarks and protecting proprietary manufacturing processes, protecting business interests and assets, managing workforce issues and high level labor relations, creating compensation and benefit plans for management and employees, and addressing tax and finance issues. We bring together the talents and passions of a unique group of attorneys who can guide you down difficult paths and help you achieve your short- and long-term business goals, whatever they may be.

 

Day-to-day support

Our automotive team works with a multitude of suppliers on a daily basis, providing consulting and legal support for practically every aspect of the automotive supply chain. We are often brought into difficult situations before there is a crisis and assist our clients in successfully navigating potentially explosive situations with a careful, reasoned, and proven approach.

Our team also regularly provides behind-the-scenes legal support to purchasing and sales departments for contractual negotiations, providing assistance to best position clients both legally and commercially.

Sometimes contracts that seemed favorable at the time they were entered become less favorable as time goes on – whether because of changing demand combined with increased or decreased volumes, commodity pricing issues, unreasonable customer or supplier demands, or a multitude of other issues. Whatever the reason, our team has the experience needed to provide insight and solutions to your unique situation. In these cases, identifying your commercial goals and putting in place a strategy to achieve your goals is our goal.

We also provide pre-litigation advice and support for almost every issue experienced by manufacturers in the automotive and other industries, including:

  • Potential supply interruptions
  • The need to resource supply from a recalcitrant supplier
  • Recall exposure
  • Customer and government inquiries regarding supplied parts and assemblies
  • Capacity limitations
  • Tooling and equipment issues

 

Litigation

Unfortunately not all issues can be resolved without litigation. When litigation is inevitable and/or necessary, our team has decades of experience in the automotive and manufacturing industries that will help us to understand and effectively solve your litigation issues. We have experience assisting automotive clients with a wide range of litigation throughout the U.S. Whether this issue is pricing demands and stop ship situations, commercial law, employment litigation to the nuances associated with the multitude of terms and conditions in the automotive industry, we work closely with you to solve disputes. And while providing legal advice is our primary function, we also recognize there are difficult business realities and relationships involved in your business.

We are prepared to act quickly and effectively when your production or supply chain is a risk. We have been involved in litigating hundreds of disputes, distributor agreements and accommodation agreements, many times with little or no advance notice.

Our attorneys also handle disputes related to the quality of goods and recall litigation, tooling disputes and virtually every other aspect of litigation in the manufacturing sector. The following is a very small representative summary of matters handled by our attorneys. Overall, our team has been involved in hundreds of similar cases involving these common industry issues.

  • Successfully represented a brake manufacturer in a multi-million dollar supply dispute related to defendant suppliers’ effort to terminate contract due to higher commodity pricing for friction materials.
  • Obtained an injunction requiring defendant supplier     to continue to ship fasteners at agreed pricing despite dramatic increase in steel prices.
  • Successfully enforced contractual terms requiring defendant supplier to timely ship automotive interior components to avoid shutdown of an OEM assembly operations.
  • Successfully defeated a claim for injunctive relief brought against Tier II plastics supplier client by demonstrating that purchase order was not a requirements contract thus eliminating client’s obligation to supply.
  • Defended multi-million dollar warranty recall claim against a supplier by an OEM related to recalled hub and wheel bearings.
  • Successfully defended defective product claim seeking recall costs related to drive-by-wire sensors utilized on heavy trucks.
  • Successfully defended a claim for breach of contract relating to MRO indirect materials from Suppliers, including performance metric issues and shipping and receiving issues into North American plants.
  • Successfully pursued claims for breach of NDA and disclosure of confidential and propriety information to competitors relating to a new design which removed weight from a component part.
  • Obtained an injunction requiring defendant supplier to continue to ship fasteners at agreed pricing despite dramatic increase in steel prices. 
  • Successfully enforced contractual terms requiring defendant supplier to timely ship automotive interior components to avoid shutdown of an OEM assembly operations. 
  • Successfully defended a claim for breach of contract relating to MRO indirect materials from Suppliers, including performance metric issues and shipping and receiving issues into North American plants. 
  • Successfully pursued claims for breach of NDA and disclosure of confidential and propriety information to competitors relating to a new design which removed weight from a component part.
     
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