Ford row highlights supplier risks

31 January 2002
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31 January 2002 | David Arminas

The row between Land Rover and its chassis supplier has highlighted the dangers of relying on a single source for essential items, a specialist procurement lawyer has warned.

Dick Jennings, partner in Leeds-based solicitors Ford & Warren, said the dispute showed how badly things could go wrong when two firms are heavily dependent on each other.

Jennings told SM: "This is a clarion call to companies that single sourcing works well if you have a close relationship with a supplier, but that without it you can be very exposed."

The warning comes after demands earlier this month by KPMG, the receiver for chassis supplier UPF-Thompson, that Land Rover pay £45 million to maintain the supply of about 70,000 chassis a year.

KPMG was not expected to stop UPF supplying chassis immediately, but argued that it will if necessary to protect UPF's bankers and shareholders.

The outcome of a court hearing in which Ford sought an injunction to guarantee chassis supplies was expected this week.

Land Rover, a subsidiary of Ford, claims it keeps only two days' worth of chassis in stock and will be forced to lay off 1,400 workers if delivery is stopped.

A spokeswoman said no formal partnership existed with UPF. "However, we did work in close co-operation, including the design of the tooling, and felt we had a partnership."

SMjan2002

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