Fiat Chrysler Automobiles is suing a Canadian auto supplier in federal court for alleged breach of contract because it cannot provide enough engine packs to make popular Jeep SUVs, Ram trucks and Chrysler minivans-the automaker said this decision may be possible It will cost more than $100 million.

According to FCA, Martinrea International Inc. “improperly and unilaterally” redistributed one of its engine block manufacturing machines in Mexico to another customer. The Italian-American automaker said that this change will bring "irreparable harm" to it-thousands of key components from Martinrea being the only external supplier, and the need to build cars, which will promote FCA in North America hit a record high profit last quarter.

"Martinrea's decision will immediately result in partial shortages that FCA US cannot recover within any reasonable time, resulting in extraordinary monetary losses that can quickly exceed $100,000,000.00, as well as plant closures, layoffs and reputational damage," FCA lawyer Moheeb Murray from Oakland County on Monday The circuit court moved to the Federal U.S. District Court for the Eastern District of Michigan.

According to the automaker, the auto supplier agreed to manufacture 13,021 engine blocks for FCA every week on a 3,500-ton aluminum die-casting machine at its plant in Querétaro, Mexico. FCA stated that after reallocating a machine to another customer, Martinrea promised to produce a maximum of 6,247 engine blocks per week.

"Insufficient supply will inevitably require FCA US to shut down the production of six best-selling automotive platforms in at least six of its factories," Murray wrote. "Martinrea failed to fully meet the release requirements of FCA US, and has caused thousands of dollars in monetary losses per hour to FCA US, as well as other incidental and indirect losses. And this amount may continue to climb to hundreds of thousands of dollars per hour."

Martinrea did not immediately respond to a request for comment. However, the supplier blamed Fiat Chrysler for the shortage of parts in a letter in response to FCA on December 11.

The automaker’s executive vice president of sales and engineering Rob Fairchild wrote in the letter that the automaker in October outsourced about 30% of the casting production it claimed to require at a plant in Kokomo, Indiana. . He added that Fiat Chrysler also authorized Martinrea to refurbish six molds instead of eight in January, which left the supplier with insufficient tools.

Fairchild wrote that FCA subsequently "suddenly changed its course" and stopped producing castings, "obviously in response to another supplier's situation."

“Martinrea was disappointed that FCA chose to source most of its casting production internally, but Martinrea relied on and redistributed the open casting production capacity that FCA decided to create,” he wrote. "Martinrea wanted to keep this business, but the FCA took it anyway.

"FCA is now suddenly asking Martinrea to produce 13,000 parts per week for a period of time-this is a weekly output that FCA has never approached in years."

He added that due to conditions during the COVID-19 pandemic, Martrinea's Mexican operations lack the skilled labor required to execute the production.

The automaker did not resolve the October insourcing change in its legal complaint. Murray wrote that it stated that it learned of the decision made by Martinrea CEO Pat D'Eramo during telephone conversations on December 2 and December 3, and this was after receiving confirmation that Martinrea could operate at full capacity. One month later. He added that Martinrea refused to hire a third party or pay third-party fees to make up for the lack of capacity.

Fiat Chrysler is applying for temporary restraining orders and orders to show that there are reasons to force Martinrea to perform its contractual obligations, any financial losses and monetary rewards for legal expenses.

The company said in a statement: "FCA US is dealing with this matter to ensure Martinrea fulfills its contractual obligations to our business." "FCA US will take all necessary measures to minimize any potential impact on our production."

Fiat Chrysler uses Martinrea's "cast and cube" Pentastar to upgrade engine blocks in Jeep Wrangler, Jeep Gladiator, Jeep Grand Cherokee, Dodge Durango, Ram pickups and Chrysler Pacifica minivans. The company sold more than 333,000 of these vehicles in the third quarter, generating a record pre-tax income of $2.9 billion for North America.

AutoTrader executive analyst Michelle Krebs (Michelle Krebs) said that for now, the automaker has sufficient inventory, but sales usually rebound in the last week of December. As of the end of November, the industry's average supply days were 69 days. The Wrangler is one of the lowest inventories among FCA vehicles that have been parked for 66 to 70 days. In total, Chrysler has 89 days, Dodge has 105 days, Jeep has 99 days, and Ram has 82 days.

"It's not what you want, but it's absolutely very good," Mark Trudell said of his inventory levels on Monday. He is unaware of the potential production problems caused by Martinrea: 

"We sold everything we could buy. The last time I talked to some people a few days ago, they said that most of their factories are running full-time, in three shifts. They are doing their best."