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Why Stellantis retreated from ‘burdensome’ contract term changes for suppliers

“It shows that you do have a say and you don’t have to just sign up for what’s being put out there,” Jorissen said. “In that respect it is a big win. If they go back to the last effective Stellantis terms, they’re still tough OE terms. It’s not like the playing field is leveled for suppliers and Stellantis.”

Jorissen said that since Stellantis established the new terms at the beginning of the year, he has sent the automaker dozens of objection letters on behalf of 40-50 supplier clients.

He said the directive was interpreted as a “slap in the face” to suppliers, which already were feeling the brunt of the pain of inflated costs for commodities, labor and freight, as well as production shutdowns.

“It was a surprise. They were caught off guard and the feedback was immediate,” he said. “The majority of conversations were, ‘We can’t sign up for these. They are so oppressive, so burdensome.'”

Stellantis is announcing its reversal just a week before Detroit area consulting firme Plante Moran releases its annual North American Automotive OEM-Supplier Working Relations Index Study, in which the automaker ranks consistently behind the pack. Stellantis COO Mark Stewart said earlier this month that the automaker continues “to work with the supplier base” to reduce costs and benefit end customers.

Jorissen said some suppliers — those that could afford to do so — cut their business with Stellantis because the terms were so unfavorable.

The head of ZF Friedrichshafen, the world’s third-largest auto supplier, said he has seen the hardline approach before.

“We have seen all of these approaches come and go. There is nothing new,” ZF CEO Wolf-Henning Scheider in a recent interview with Automotive News Europe. “What do you do as business leader? You discuss things with your team, and you shift capacities and your best people to the constructive relationships. In my experience, having a constructive relationship doesn’t result in a pricing disadvantage for either company…

“The (hardline) approach is a short-term approach that we have seen, we know how to handle, and we believe will change over time.”

Stellantis spokeswoman Jodi Tinson told Crain’s Detroit Business in an email that the automaker did not lose any suppliers. Of the new terms, she said that “nothing has changed from the prior contractual commitments.”

“That said, it has always been Stellantis’ practice to work with suppliers on a case-by-case basis,” Tinson added. “As a good business practice, we will continue to evaluate our terms and conditions to ensure we are operating as efficiently as possible.”

Jorissen said there is precedent for automakers caving to pressure from suppliers — General Motors Co. did so 10 years or so ago. Still, he is surprised Stellantis did not anticipate the blowback.

“Maybe they just didn’t think it was going to be so extreme,” he said.

The Stellantis letter to suppliers continued, “We appreciate your input and feedback into this process. We will work to continue to align with our supply base and aim for continued success for our respective organizations.”

Automotive News Europe contributed to this report.


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