The global automotive supply chain has always been a fragile. But the current drama involving Stellantis and its Canadian supplier, Peterson Spring, proves how hilariously vulnerable the entire system is. The battle is currently being waged in an Ontario courtroom, all over the humble brake rotor. A component so simple, yet so essential that its lack threatens to halt production of the lucrative Dodge–Ram and Jeep Grand Wagoneer in Michigan.
Peterson Spring, operating out of Woodstock, Ontario, has filed court documents asserting they simply cannot afford to ship the rotors to Stellantis at the current contractual price, claiming they are selling the parts below the cost of production.
Stellantis’s response is less sympathetic and more accusatory. Their lawyers claim Peterson Spring is essentially engaging in extortion, demanding double the contract price, an annual increase totaling a whopping $77 million USD, or face an immediate cessation of shipments. The automaker stresses that any interruption from this sole-source provider would cause “enormous and immeasurable” chaos, including the immediate closure of their two crucial assembly plants in Warren and Sterling Heights, Michigan.
Peterson Spring acquired the Woodstock facility this past summer after a complicated deal involving subsidiaries of First Brands Group, an American aftermarket parts giant whose billionaire founder, Patrick James, recently stepped down amid accusations of having stolen billions from the company.
Peterson Spring’s new management claims they inherited the uneconomical Stellantis purchase orders. General Manager Timothy Soergel stated that the previous owner, ZF, was able to sell the rotors below cost only because they subsidized the loss with massive profits from their other, more diversified businesses.
Faced with the imminent closure of two US plants, Stellantis was forced to blink. On October 28th, the parties struck a temporary deal: Stellantis will pay an additional, immediate lump sum of $7.2 million over the historical parts price to keep shipments flowing until November 17th. In the meantime, Stellantis is desperately asking the Ontario court to appoint an independent company to run the Woodstock operation and guarantee continued supply.
