Suppliers routinely grouse about pricing from their OEM customers, but to do it in public is rare. When hundreds of millions of dollars are at stake, the dispute becomes too serious to contain. Visteon Corp. questions the “productivity price adjustments” requested for 2001, 2002 and 2003 by its largest customer and former parent Ford Motor Co. It's way too much, Visteon says, exceeding the supplier's reserves by approximately $125 million before taxes.
On a percentage basis, Visteon says its price adjustments are higher than those given to Ford by other suppliers. Auditors will check the math. Visteon also disputes a $50 million tab left from a unilateral price cut from Ford of Europe for 2001. Visteon will seek mediation and arbitration if necessary.
“We believe the clear spirit of the spin-off agreements with Ford is that Visteon will be treated in an equitable manner — and no differently than other Tier 1 suppliers,” says Pete Pestillo, Visteon chairman and CEO. The episode illustrates how badly Visteon needs business with new customers: nearly 80% of its sales are to Ford.
