Stellantis change of course not a complete victory for suppliers

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Although the changes to North America have been reverted, Stellantis is keeping its revamped terms and conditions in place. Some vendors might still require the company to remove certain aspects they deem unfavorable, said Jonathan Jorissen, attorney at Brooks Wilkins Sharkey & Turco.

“Most of the vendors I’ve spoken to have objected to both the global terms and the North American terms, so it’s kind of a blanket deal,” Jorissen said. “So it’s quite interesting the path that Stellantis is taking now, still trying to stick to the terms and conditions, but replacing the North American exposure with the previous terms and conditions. Because I know they’ve received a number of objections to these global terms, so the story is not over yet.”

Stellantis has introduced the new terms as it makes the costly transition to electric vehicles. CEO Carlos Tavares has stressed that the automaker needs to make productivity gains in the coming years to offset the extra expenses incurred when building electric vehicles.

“Our buyers are working with suppliers daily to clarify issues and ensure business continuity,” the company said in a statement last week about rolling back changes to purchasing terms. “We will continue to listen and align our processes with our supply base.”

Tavares said Automotive News in March that Stellantis and suppliers are on the EV journey together, but the automaker’s aggressive moves to save money were a step too far for the supply base.

“The supply base needs to make a major investment in EV platforms,” said Vanessa Miller, partner at Foley & Lardner in Detroit. “That risk and those costs are going to be borne by more than just the tiered suppliers. The OEMs also have to bear some investment costs and some volumes and some of the risks associated with that, otherwise the suppliers won’t be very much committed to make these investments without the certainty of volumes.”

What happens afterwards? Jorissen said providers will again focus on global terms as well as the 2021 North America terms and conditions that came out after the merger.

Suppliers need to keep tabs on global intellectual property and product design issues, he said. Intellectual property is something that “I would encourage vendors to consider carefully,” he said, “because there are extensive licenses and the ability to have your product made by someone else in certain circumstances. “.

Foley & Lardner attorneys have studied the changing language in Stellantis terms and said vendors should be aware of the remaining global changes.

For example, the company emphasized that suppliers must bear all costs associated with regulatory compliance.

“I wouldn’t necessarily say it’s a huge change, because it avoids any disputes or discrepancies that might come into play,” said Nicholas Ellis, a lawyer at Foley & Lardner who specializes in manufacturing disputes and of supply chain. “If, for example, there are changes in the regulatory environment, the regulatory system would really remove any argument that the supplier has the ability to move them up the chain to Stellantis. They will be responsible for those costs. .”

The terms and conditions also state that suppliers will have to ensure that products are accurately labeled with their place of origin.

“To the extent that the supplier is getting materials down the supply chain,” Ellis said, “this is going to formally place the onus on suppliers to do their due diligence and ensure the accuracy of the materials they they get from their subcontractors”.

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