Chrysler Ready to Drop Supplier Collins & Aikman

CHICAGO October 3, 2003; The AP reported that Chrysler is ready to drop all contracts with troubled supplier Collins & Aikman Corp., according to a report published Friday.

Collins & Aikman shares fell $1.30, or 35 percent, to close Friday at $2.43 on the New York Stock Exchange.

A spokesman for Chrysler, the U.S. unit of DaimlerChrysler AG, said he couldn't confirm a report in the Detroit Free Press quoting unnamed officials at Chrysler.

"We consider our relationships with suppliers to be proprietary," said Dave Barnas, adding that when there are issues with suppliers, the company works to find a "mutual agreeable solution."

Chrysler's current and planned business with auto interior supplier Collins & Aikman is worth $1 billion, according to the newspaper.

A spokesman at Collins & Aikman, in Troy, Michigan, didn't immediately return calls Friday. In the article, David Stockman, Collins & Aikman's chairman and chief executive, denied that Chrysler was the contracts to other companies.

Losing Chrysler's business would be a huge blow to Collins & Aikman, which analysts expect to report a loss this year of $65 million on sales of about $4 billion.

Stockman in August assured analysts that the auto supplier, which got in financial trouble when it expanded too quickly, was putting the past behind it. He announced a restructuring of top management and said management staff would be cut by 750 employees, or 14 percent, to cut costs.

But analysts said Friday that Collins & Aikman has continued to have trouble with Chrysler over product quality, cost and deliveries.