A legal battle between two automotive suppliers threatens to halt the production of full-size GM pickup trucks. Michigan-based Nexteer is suing South Korea-based Primax over a dispute regarding raw material cost increases. GM trucks rely on Nexteer steering columns, which employ Primax tie rods.
Primax is demanding a lump sum payment of $6 million from Nexteer plus price increases estimated to cost about $3.5 million annually. Nexteer makes a legal claim that these costs and lack of supply constitute a breach of their contract. Primax has halted tie rod deliveries until its demands are met, which could seriously disrupt GM’s U.S.-based truck manufacturing.
“Once GM runs out of those assemblies, it will have to shut down its operations manufacturing those vehicles,” the lawsuit, filed by Jason Killips with law firm Brooks Wilkins Sharkey & Turco, states. “Such a shutdown will result in substantial losses, including immeasurable monetary losses and enormous irreparable harm to Nexteer’s customer relationship, industry-wide reputation, and customer goodwill.”
The lawsuit alleges that Nexteer’s 2024 contract with Primax requires “firm fixed prices” that are “not subject to increase for any reason, including increased raw material costs, or changes in volumes or program length from those estimated or expected.” Meanwhile, Primax claims it was “fraudulently induced” into the contract with no procedures for adjusting prices.
“The parties to a contract, and thus the contractual language, can never perfectly match the facts and circumstances of events as they unfold,” attorney Mitch Zajac told Crains Detroit Business. “Determining the responsibility is the heart of the disputes because cost increases from raw materials and unforeseen government action cause disruption to the otherwise controlled chaos of the automotive supply chain.”
Although the lawsuit filed on April 10th doesn’t specifically mention tariffs, the Trump administration’s new import tariffs on steel, aluminum, and automotive components are likely a reason for the cost increases.
GM builds full-size pickup trucks at its manufacturing sites in Fort Wayne, Indiana, Flint, Michigan, Oshawa, Ontario, and Silao, Mexico. The company is in the process of increasing truck production at its Fort Wayne location to mitigate tariff costs, but legal battles outside of GM’s control could muddy those plans.
Comments
Find another domestic supplier now! While you fight the legal battle.
There’s also full parking lots at dealerships across America and Canada absolutely full of overpriced pickup trucks,so that is a years supply. Employees prices are a joke and people are getting ready for a orange recession.
aww you poor baby, have you forgot 9% inflation under Mr. poopy pants Biden? Were you ok with that?
It is the “orange” boy that wears the diapers.
That doesn’t happen overnight!
Plain and simple, the tarrifs are increasing costs for the part from south Korea. Smarten up Nexteer
The fallout from Trump’s stupidity on trade is just beginning to show itself. We’ll be cleaning up this mess for years. Maybe let’s stop electing 80 year old’s in diapers to run the Country.
Or we could stop taking financial advice from a businessman that filed multiple bankruptcies including Casinos!
Yes. that explains the transport truck delivery at trump*s house. Sign on truck says ” D.C DIAPER ” service? One such truck at elon*s house too?????
“Maybe let’s stop electing 80 year old’s in diapers to run the Country” Yes, your correct, Biden did wear Diapers. No matter what happens, we will still be better off than if the clucking chicken lady got in.
If GM makes 1,000,000 trucks, Suburban’s, Tahoe and Escalade it is only $6 a truck. Big boys, playing big games. That is why Ms. Mary made almost 30M last year. GM stock is up 50% from a year ago and set record earnings. What savvy supplier wouldn’t want a larger piece of the pie.
Side note: very soon after the election, I posted that I hoped the newly elected big guy would ban all black interior. The post was pulled because it was deemed political. Now days, the big guy seems to work his way into almost all post. Mine was just a brief statement on my disgust for two color interiors, one of which is black and not really political. I guess the deleting a post that brings up the big guy is pretty much the norm now.
Ha, meant to say NOT Deleting
So don’t buy tie rods from Korea? That’s not a high tech item.
Not that simple. It takes time to line up another supplier. It’s not a high tech item but is very important for the vehicle safety. This incident should educate many people about how difficult will be to move complete vehicle manufacturing back in US.
GM needs to have their Canadian plants retool for flex production, build and sell in Canada the remainder vehicle can be shipped worldwide at no tarif costs
Hmmm, I’m not really feeling too sorry for GM or any supposedly domestic manufacturer. How many foreign parts are in my 74 Fleetwood, 66 Corvette, 52 Chevy pickup, 71 Chevy pickup, 72 Olds 442. We know what happened shortly after these cars’ time period. GM and the UAW only have themselves to blame for their greed and the lose of domestic jobs.
10-4 … Unions have trouble thinking long term. All they know is short term, gimmie gimmie gimmie more $$$$$$$. To stupid to think about long term effects and how they are screwing themselves in long run.
Labor in 2024 was about 5% of the cost of a Silverado truck. Down from 11% of the cost in 2004. No more retirement, no more pensions. Over 1/3 of the work force are 20-34 hours max part-time temps. Unions are just another branch of management.
If you’ve never worked in the auto industry you have no concept of what it takes to resource any given single part, especially an FMVSS part. Federal Motor Vehicle Safety Standards. If you want your tie rod end to break prematurely, your brake pad to fall off, fuel tank to prematurely fail, then screw around with parts manufacturing. There are hundreds of parts that NEED to be safe and durable. Anything that tries to expedite the testing REQUIRED to validate those parts is asinine (suicidal). And that’s just initial testing, what about the ongoing Quality procedures to ensure everything is done properly throughout the manufacturing process life? STOP making uneducated comments. Opinions are like a@*holes. Everyone’s got one. Because it’s a Federal Agency that oversees this stuff, be wary(fearful) if you hear about DOGE getting anywhere near it. Your life and those of your loved ones truly depend on it.
Thank you Fred, for educating some of the poorly educated, that think switching suppliers is just like buying paper clips at a different store, that also goes for moving auto manufacturing back to the states, nice idea, but it would take years to do. Plants are not pulled off a shelf and up and running in a couple of months, especially if it is an entirely new product. I agree keep DOGE, President Musk and 2nd President Dump away from anything that has to do with product safety. But so far Muskrat has managed to cut the hell out of jobs of the people that protect our health. Thanks to Don the Con and Project 2025….you know that idea that Donnie boy claimed he knew nothing about during the campaign.
There is already an aftermarket tie rod to replace the stock one now because the stock ones bend so easily. Here’s an idea quit buying junk from overseas in the first place.