Maybe Dana's stint in bankruptcy has steeled it for battle with Detroit's Big Three automakers, as evidenced by its Wednesday announcement that it has asked the U.S. Bankruptcy Court for the Southern District of New York in Manhattan to enforce a settlement the company reached with Chrysler LLC in August 2007.
The motion contains a threat -- the type usually made by a customer in the auto world, not a supplier -- that Dana will stop providing Chrysler with parts beginning on Jan. 1 if the terms of the settlement aren't followed. Dana doesn't disclose what those terms are, but it's likely it has to do with the price Chrysler is paying for parts.
Heretofore, it's been the automakers dictating the terms, namely through access and accommodation agreements. These pacts protect the automaker and give the parts supplier some financial help. The supplier will then usually end up selling its assets in whole or in pieces, and the customers will then abandon the company by re-sourcing its business to a different parts maker.
A big reason for this is the often bloody practice of negotiating prices paid for parts, which is a game largely won by the automaker. It is quite common to hear a parts maker complain in bankruptcy court papers that commodity prices have increased and that it wasn't able to pass those cost increases on to customers. Several parts makers have tried to take those fights to bankruptcy court, asking judges to enforce contracts that give parts makers a better chance to survive. It's not often that they are successful. Defunct Amcast Industrial Corp., for example, engaged in one of the most drawn out pricing fight battles on record, and eventually liquidated despite its efforts.
That's what makes the move by Dana, one of the large parts makers to successfully reorganize in the past few years, to enforce a better contract with Chrysler so interesting. The company, which emerged from Chapter 11 on Feb. 1, has supplied Chrysler with parts for more than 70 years. And while it made it clear that it hopes that long relationship will continue, Dana CEO John Devine noted in a press release that the goal is to get a "market-competitive agreement" with Chrysler going forward. Since Dana is one of the rare parts makers to make it out of bankruptcy in one piece, perhaps it has the leverage to do so. More than likely, many of Dana's struggling brethren are probably pumping their fists, cheering the company on. And are green with envy. - Ben Fidler
Auto parts makers have had to eat the dust of their automaker customers the past few years. But Dana Corp. didn't on Wednesday. 
