TOLEDO, Ohio — Chrysler risks a possible production shutdown should supplier Dana Holdings win a lawsuit to end a money-losing contract. Chrysler would have few options to replace Dana’s axles and driveshafts, said James Gillette, a consultant with CSM Worldwide Inc. in Grand Rapids, Mich.
“It puts an enormous amount of pressure on Chrysler,” Gillette said Thursday, a day after Dana asked a bankruptcy judge to let it halt its parts accord on Dec. 31. “It’s not like there are 200 other suppliers they could go to. Dana does have some level of bargaining power.”
The dispute is at least Chrysler’s third this year as the automaker tries to shrink spending amid a 23 percent drop in U.S. sales.
Dana, based in Toledo, said rising steel prices mean it’s losing $75 million annually on its parts agreement for six Chrysler models.
“We’re not out here to pick a fight with Chrysler,” Dana chairman John Devine said on a conference call with analysts. The Chrysler business has “a significant loss and we need to address that,” he said.
Chrysler’s view is that “while the agreement may end Jan. 1, 2009, the underlying purchase orders were intended to continue in accordance with their terms,” said Kevin Frazier, a spokesman for the Auburn Hills, Mich.-based automaker.
