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A Portland motor vehicle component manufacturer is asking a federal court to step in and force one of its key suppliers to immediately send parts. If not, the company predicts, the supply chain could be damaged for up to six months.
FCC (Indiana) Inc., a clutch assembly manufacturer, is accusing Pace Industries Inc., an aluminum die casting company headquartered in Michigan and operating 11 manufacturing facilities across the U.S. and Mexico, of breaching a contract by failing to deliver motor assembly parts.
FCC says Pace’s refusal to deliver any parts since mid-March will “have catastrophic effects and leave FCC unable to meet its contractual obligations” to its original equipment manufacturers, Ford Motor Co. and General Motors LLC — two of the largest carmakers in the U.S.
Pace counsel Jonathan Bont, a partner at FBT Gibbons in Indianapolis, declined to comment.
Attorneys for the FCC did not respond to The Indiana Lawyer’s request for comment before Thursday’s deadline.
According to the March 27 complaint that was filed in the U.S. District Court for the Northern District of Indiana, FCC and Pace’s contract stipulates that Pace would supply FCC with specially-manufactured automotive housings — sub-components that FCC uses to make its automatic transmission clutches.
FCC would then ship the clutches on a daily, “just-in-time” basis to Ford’s plant in Livonia, Michigan, and to GM’s plant in Silao, Mexico. According to the lawsuit, much of the automotive supply chain uses this quick approach to reduce warehousing and storage costs.
“But this approach also means that when one supplier fails to deliver parts, the rest of the supply chain will quickly come to a halt,” the complaint stated.
FCC now alleges that Pace has refused to release its parts unless FCC agrees to “extraordinary and extracontractual financial demands.”
The complaint states that on Jan. 28, Pace sent a letter to the FCC’s vice president stating that “Pace has dealt with financial challenges the last four years driven by commodity price increases, elevated shipping times/freight costs, and underutilized plants.”
Pace announced in February that it would close its Harrison, Arkansas, plant – the primary producer of the FCC’s needed housing parts, according to the lawsuit.
Given its financial pressures, FCC alleges, Pace requested that FCC make immediate payments on accounts payable, totaling $4 million. FCC also says Pace requested a price increase of 36% for its parts.
The lawsuit states that, as a showing of good faith, the FCC made a one-time payment under protest for certain parts Pace had already delivered but for which the payment wasn’t due yet.
“Upon information and belief, rather than using FCC’s payment to ensure supply to FCC, Pace instead caused FCC’s payment to be used to pay one of Pace’s lenders,” the complaint states.
So on Feb. 6, the FCC rejected Pace’s demands, instead arguing that their supply agreement is a 100% requirements contract and that the agreement’s terms “also preclude Pace from raising prices.”
FCC says the two companies attempted to form an interim supply agreement to avoid Pace’s accommodations request and litigation. However, the complaint states that Pace “changed its mind” and rejected the interim support agreement, instead doubling down and refusing to supply the parts unless the FCC agreed to the new accommodations.
Since Pace did not supply parts by March 17, the complaint states, the FCC will not be able to supply the full quantities of clutches to Ford and GM by April 20.
“FCC’s production lines will have immediate downtime, and Ford and GM’s production lines will have downtime starting around April 22, 2026,” the complaint states. “Pace’s breach of contract will cause extensive and irreparable harm to FCC, its customers, and the rest of the supply chain.”
FCC requests the court issue a temporary, preliminary and permanent mandatory injunction against Pace, requiring the company to supply FCC with the parts.
FCC also requests to be awarded money damages for “all forms of economic loss,” including direct damages, lost profits and lost goodwill.
The case is FCC (Indiana), LLC v. Pace Industries, Inc. (26-cv-00148).
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