DAILY NEWS Apr 24, 2006 9:29 AM - 0 comments

Supplier tells GM they want out

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Yorozu Corporation, the Japanese supplier of stamped steel parts for several GM models has said they now regret their decision to do business with General Motors, a relationship founded in 1990.
In addition, the parts supplier has asked a district court to void all of its remaining contracts with the Automotive giant, saying that they simply could no longer tolerate GM business practices.
Yorozu has an exclusive contract to supply stamped metal parts that are crucial to the production of the Chevrolet Malibu and Colorado, Pontiac G6 and other nameplates.
In a letter to GM's North American purchasing operations, Kazumi Sato, president of Yorozu America Corp. wrote,
"In light of GM's unilateral actions to reduce retroactively the price of components produced and to be produced for GM, which amounts to breach of contract, Yorozu has no alternative but to cease doing business with GM."
That letter was included with many other court documents filled in September, reportedly after General Motors insisted on altering some 80 aspects of Yorozu's contract, in a move designed to slash costs.
For their own part, GM has recently filed their own raft of litigation in Michigan, suggesting that Yorozu had been overcharging GM for parts. The documents insist that the automaker was simply trying to correct the differences, when they began reducing payments.
However, both sides in the case acknowledge that GM subsequently tried to refund the money that had been cut, which was met with a Yorozu refusal, and demand to be relieved of further dealings with the embattled automaker.
The sudden departure could mean a large contract for a North American supplier, as GM will be scrambling to find a replacement.
Unfortunately, the only other Yorozu competitor in that particular market segment is Tower Automotive, which is already operating under chapter 11 bankruptcy protection.


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