jerryc41 Loc: Catskill Mts of NY

Contracts can be good or bad, depending on which side of the paper you're on. As you probably know, car companies source components from all over the world, and they have contracts with suppliers. One thing that's always been unusual about these contracts is that there is no number of items specified. "I will build these for you for $20 each."

The Michigan Supreme Court recently ruled that a contract must contain the number of items to be produced and bought. Car companies have never done that because they don't know how many cars they will produce. Suppose the cost of supplies increases, and the supplier wants to raise his price? Suppose another car company offers to pay him more? According to the MI Supreme Court, the car maker's contract must specify the number of items he is going to buy. This also applies to suppliers of the car companies and the businesses that supply the suppliers. How many speedometers should Chevrolet order?

I see this going back to the courts again because no one can predict how many models of a particular car people are going to buy.

https://www.youtube.com/watch?v=19mzPgfgCHg

dpullum Loc: Tampa Florida

Many supplies are JIT, just-in-time, supplies. One of the plants in the corporation I worked for made firewall silencers, the only supplier. The plant burned to the ground!!! OH OH !!! Quickly the machinery was salvaged and sold to another company that supplied the Auto Industry.

How many parts and when, has always been an open item. JIT cuts inventory reduces money spent before the need ... In a JIT world, pinning down "the number and when" may be comfort for judges, but will be a nightmare for companies on both "sides of the paper."

jerryc41 Loc: Catskill Mts of NY

JIT has sometimes been a problem because a supplier will have a problem of his own. With nothing in reserve, car production stops. Boeing now sources parts from all over the world, and many of those parts have been defective. They're saving money, though, and that's what's really important.

Triple G

Car computer chips are a prime example of this.

jerryc41 Loc: Catskill Mts of NY

Yes! Some cars have been built without certain features because chips were not available.

ecblackiii Loc: Maryland

And you worry about this?

jerryc41 Loc: Catskill Mts of NY

I was tossing and turning all night!

paulrph1 Loc: Washington, Utah

The governments is not interested in business ventures only in controlling the people who are under them. Your loss is your loss. It is not your loss is our gain, monetarily.

Reuss Griffiths Loc: Ravenna, Ohio

Most supply chains these days are demand driven and a lot of manufacturers have developed the flexibility to respond to demands on a daily basis.

pendennis

I wouldn't interpret this ruling too broadly. Contracts for parts suppliers usually include minimum and maximum volumes at particular prices based on those volumes. There are also provisions for engineering changes, tooling, economics (whether materials or labor), and a host of other provisions all reviewed by legal staffs within and without the company.

This sounds like a very specific exception, and the Michigan AG will have a devil of a time trying to enforce contracts which fall within the purview of Congress. For one thing, most state AG departments are not equipped to handle the volume of cases which may likely result in the courts' rulings. State courts have generally stayed out of these conflicts, since there are still remnants of Wickard v. Filburn, 1943, still intact.

I was, for several years, an accounts payable supervisor, and we dealt with similar problems, both locally and nationally when it came to contract disputes for purchases.

jerryc41 Loc: Catskill Mts of NY

Fortunately, it's not my problem.

SteveR Loc: Michigan

Lack of flexibility might drive what car producers are left in Michigan OUT of Michigan. However, I would think that there would be good ways to both specify guaranteed quantities but allow for additional orders.