Chrysler Shakiness Causes Collins and Aikman Stock To Quake

DETROIT October 3, 2003; Reuters reported that shares of automotive parts supplier Collins & Aikman Corp. tumbled more than 30 percent on Friday amid concern its business with key customer Chrysler is in jeopardy.

Chrysler put its current and future business with Collins & Aikman, which amounts to about $850 million annually, under review to compare it to rival offerings, an official familiar with the matter told Reuters.

"It would be an accurate assessment to say that (Collins & Aikman's) business is under an internal review," said the official, who declined to be named. "It's not good ... either way. You never want to be under review."

Each component of Collins & Aikman's annual sales to DaimlerChrysler AG will be compared to rivals on a number of key metrics, including price, quality, delivery and technology, he said.

Collins & Aikman shares fell $1.14, or 30.6 percent, to $2.59 in midday trading on the New York Stock Exchange .

Officials at Collins & Aikman did not return telephone calls from Reuters seeking comment.

"If there are any issues with a particular supplier we will always first work toward reaching a mutually agreeable solution," Chrysler spokesman David Barnas told Reuters. He declined to comment further.

The Detroit Free Press, which first reported the dispute, cited an unnamed Chrysler official in a report on Friday who said that Chrysler has already decided to put Collins & Aikman's contracts up for bidding with competitors.

However, the official familiar with the matter told Reuters that the Collins & Aikman contracts may not be put up for rebidding or sourced to other suppliers once a review is finished.

Troy, Michigan-based Collins & Aikman, which had net sales of $3.9 billion last year, is headed by David Stockman, the former budget director in former President Ronald Reagan's administration. In the Free Press, Stockman was quoted as saying the report of Chrysler offering up all of its business to other suppliers is "flat wrong."