Refusing to cut prices, Decoma loses contract

In another instance of long-simmering friction between automakers and suppliers flaring into open dispute, Decoma International’s refusal to bow to demands from Ford Motor Co. for prices cuts has resulted in Ford giving a $40-million contract to another supplier.
Ford Motor had asked Decoma to reduce the price it charged the OEM to make front and rear fascias for the Freestar minivan, according to a report published in the Globe and Mail. When Decoma refused, Ford switched the contract to Flex-N-Gate Corp., a company with headquarters in Urbana, IL. The switch to Flex-N-Gate will be made over the Christmas holiday shutdown. Flex-N-Gate will manufacture and assemble the parts at its Tillsonburg, ON facility.
In an email, Decoma International president and CEO Al Power said, for the time being, the company would not comment on the loss of this contract. Ford is one of Decoma’s biggest customers, accounting for approximately 30% of the supplier’s $2.1 billion in sales in 2002.