TROY, MI, Dec. 17 -- Struggling auto supplier Collins & Aikman Corp. is retroactively cutting what it pays its suppliers by 5%, according to the Detroit Free Press.
In letters sent over the last few months, the interior parts supplier warns suppliers the 5% cuts go back to all purchases since Jan. 1, 2002, the report said. It blames the cuts on cost-cutting pressure from automakers like the Chrysler Group and on its own financial problems.
One letter dated Nov. 25, says the cuts are "part of Collins & Aikman's plan to meet fourth-quarter cost-reduction goals," the story said. According to documents attached to the letter, it was sent to about 225 suppliers that do less than $1 million a year in sales with Collins & Aikman. Many of the suppliers receiving the letter are small, locally owned suppliers such as Farmington Hills-based Rieter Automotive and Auburn Hills-based Irvin Automotive, the newspaper said.
The letter warns this is "notification of Collins & Aikman's intent to issue a debit memo for 5% of our estimated annual buys." Similar letters were sent in August and October.
Collins & Aikman has annual sales around $4 billion. Through the first nine months of 2002, it had lost $50.4 million on sales of $2.92 billion. It lost $46 million last year.