More litigation.

The lawsuit filed by General Motors against Goodyear Tire could get real interesting. Not to get tangled in too much legalese, the suit involves GM basically asking for money back. Earlier this summer, Goodyear sent a bill to GM for $22.3 million, primarily to cover the increased costs of materials. The tandem increases in natural rubber and petroleum product prices (some market driven and some contrived) pretty much affected most ingredients that go into rubber product manufacturing. Goodyear was passing on the increases. GM balked at the initial request, but eventually agreed to pay $15 million. Now they want that sum back.

The very fact that Goodyear tried to bill the soon to be second largest car company was a stunner. Detroit has long looked at the rubber industry as a source to improve their bottom lines. Dictated price reductions are the norm, not the exception. Goodyear's threat to withhold tire shipments is a risky tactic and ranks up there with Bridgestone's announcement a few years back that it was no longer going to supply Ford.

Supposedly, the tires that Goodyear was threatening to withhold from the automaker would put GM in a position that could delay the introductions of some models it wants to introduce. So they paid the money, and now they want it back. If GM is successful in this suit, maybe the robber industry could use this as a precedent to recover the forced price reductions it gave back to Detroit since the time of Henry Ford.

The lawsuit, which was originally filed in a county court, has now been switched to the Federal court in Detroit. According to GM's suit, if Goodyear had followed through with stopping tire shipments for selected models, production at GM's Delta Township plant would have started late, and GM would have been forced to shut down one line at its Flint assembly plant and ultimately lay off employees.

Goodyear supplies more than eight million tires to GM annually. This decision to try and actually not lose money on a contract of this size has been a no-brainer for years, but never followed through. If this litigation plays out, it will give tremendous insight to the state of supplier relations in the auto industry.