General Motors filed suit against Textron and Steel Dynamics
According to reports from the industry, last week, General Motors Corp. (GM) filed a suit against its two suppliers, Steel Dynamics Inc. and Textron Inc., claiming that the premiums requested by the two companies violate their contracts with GM.
As well known, massive demand from
China caused serious raw material shortage problems worldwide as well as in the US and thus hiked steel prices to unprecedented levels. In line with this upward trend in steel prices, steel mills have been declaring price increases constantly in order to offset raw material costs.
Likewise, Steel Dynamics and Textron decided to charge premium despite previously signed contracts with GM in order to relieve their cost burden. Although GM refused to accept these premiums, however had to agree as the two companies threatened to stop shipments, which may result in cuts in
production or even shut downs for GM.
In 2003, GM consumed an average of almost 6 million tons of steel.
Steel Dynamics and Textron do not comment on the issue for now. Further developments will be reported by SteelOrbis.