Like many other OEMs and suppliers, DCX and Lear recently found themselves in a heated discussion about component pricing and the increasing costs of raw materials.

It turns out that the pain we felt at the pump a few months ago is still being experienced by anyone buying plastic resin - a petroleum-based product. Instead of working things out amicably (I use this word strictly in a tongue-in-cheek sense) as is usually the case, Lear stated that it would continue to ship certain parts to DCX for a month and then cut off shipments if a price increase was not obtained. DCX responded with a lawsuit, and a judge recently ruled the Lear must continue the shipments in the near term.
Obviously, there's a contract in place, and that would normally make this a no-brainer, but Lear claims that the contract is no longer valid due to "unilateral" price cuts by DCX earlier this year. This usually occurs when your customer makes a phone call one Monday morning to mention that it will be amending the purchase order to improve the pricing, and oh yeah, the previous few months of P.O.s have been amended as well to provide a retroactive price cut and it'd be wise to shut up if one would like to continue to get the "opportunity" to bid on future business. DCX claims that it did no such thing.

It's a tough business out there, folks.


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