Month: May 2023

As part of the accommodation agreement, customers also agreed not to “exercise certain rights of set off, recoupment or deduction” and not to resource parts components to other suppliers.

The deal imposes a deadline of Oct. 31 for the company to be sold to a qualified buyer. The agreement may be terminated by a customer if a default occurs. The company must formulate a restructuring plan, hire a chief restructuring consultant and engage an investment banker within 30 days.

“The accommodation agreement provides for specified price increases to be paid by customers during the term or other funding to be provided by customers to the company through the purchase by customers of a junior tranche of debt to be established under the credit agreement of up to $15 million in the aggregate,” the filing said.

The financial struggles of Unique Fabricating, which supplies plastics, rubber and foam, became apparent earlier this year when it failed to report its financials for the fiscal year ended Dec. 31 due its statements being investigated for inaccuracies. Additionally, the company is being investigated for alleged labor rights violations at plants in Mexico.

In its most recent financial report — the one under review — company executives said it took a $6.2 million operating loss and $10.6 million net loss in the third quarter, with projected full-year sales of $136 million. It had just $500,000 in cash and $1.3 million in liquidity under its revolving credit facility.

The company, which also counts Rivian Automotive Inc. and Bosch as customers, aims to continuing operating amid the restructuring process and potential sale.

Unique Fabricating could not be reached for comment Tuesday.

“GM is aware of the developments at Unique Fabricating and is supportive of it as a going concern,” GM spokesman David Barnas said in an email. “As such, we are working with several of Unique Fabricating’s other customers and its creditors to allow them to be viable long-term through either a restructuring or sale. We do not expect any interruption to GM supply during this process.”

Stellantis declined to comment.

Like other automotive suppliers, Unique Fabricating has struggled with production volatility, shrinking volumes and inflation, which have had an outsize impact on smaller companies further down the supply chain.

The accommodation agreement indicates that automakers and Tier 1 suppliers are still willing to make financial concessions to suppliers to keep them afloat, as they did during the supply chain snarls over the past couple of years. When Gissing North America LLC filed for Chapter 11 bankruptcy protection last August, GM, Toyota and BMW agreed to fund Gissing’s projected liquidity shortfall of more than $14 million as a bridge to it being sold.

Unique Fabricating shares were trading at 23 cents per share as of Tuesday, having lost nearly all of its value since launching its initial public offering in 2015 at $11 per share.

The enactment of new tax credits for electric vehicles in the Inflation Reduction Act is a centerpiece of the Biden administration’s commitment to fight climate change by revolutionizing the way we fuel our trucks and cars. These incentives of up to $7,500 per vehicle will provide a huge boost to clean-car production, making the goal of a low carbon future for the auto industry far more realistic.

But in the haste to ensure such incentives will benefit domestic production, Congress created a daunting new obstacle to that very goal. The law’s complex and restrictive sourcing requirements may actually slow domestic EV production, handing a competitive advantage to China, which already has a huge lead in EVs. While this was obviously not the intent, Biden and Congress must work together to implement the act in a way that avoids such a perverse outcome.

While allies continue to fume over the Inflation Reduction Act’s North American assembly requirement, perhaps a greater obstacle is the law’s restrictive rules on the sourcing of critical minerals essential to battery manufacturing. By mandating that within seven years 80 percent of these minerals be sourced within the United States or from free-trade partners, the law risks bifurcating global pricing, raising domestic input costs for U.S.-based auto companies while lowering them for producers elsewhere. This could render the credit unusable for many U.S. auto producers, creating higher sticker prices and even shortages of our EVs while we watch China, Japan and Europe expand their output, the exact opposite of the IRA’s objective.

How bad can this dichotomy become? Analysts broadly acknowledge that we cannot power an EV revolution based solely on the minerals accessible under current rules. And not only EVs require battery production, but solar and wind farms needed to meet higher electricity demand. Moreover, the EV revolution is occurring worldwide, intensifying the scramble to secure long-term supplies of critical minerals. Even with new lithium mines coming on stream, the U.S. will probably produce less than a quarter of future demand for that crucial input. Meanwhile, the U.S. has less than 1 percent of global cobalt and nickel reserves. An even bigger problem is that China is already the dominant world refiner of critical minerals, refining 73 percent of the world’s cobalt, 68 percent of its nickel and 60 percent of its lithium.

While some of our free-trade partners, such as Canada, Australia and Chile, have significant reserves of certain minerals, they also have existing markets with long-term buyers. We can count on them for a share of our needs, but locking out other lower-cost suppliers who don’t enjoy free-trade agreement status puts us in a perilous position. Many of these countries hold huge shares of global reserves in key minerals. They are crucial to our success, and if we don’t bring them inside our supply chain it will only strengthen reliance on China as the market for mining output. Partnership with these potential critical mineral suppliers is crucial to breaking China’s stranglehold over global battery production.

So far, Indonesia, the Philippines and Argentina have asked to initiate critical mineral agreement talks with the U.S., and negotiations are ongoing with Europe. Securing critical mineral agreements quickly, as was done with Japan, can be part of the solution to the materials challenge. We must acknowledge that without building a network of critical minerals suppliers the promise of the Inflation Reduction Act from an environmental and jobs standpoint will not be realized. By engaging as many trade partners as possible through critical mineral agreements, the U.S. has a major opportunity to impact the way in which countries exploit their resources, while also securing our own supply chain. Further, this would give us a chance to promote higher environmental and worker standards in these markets vs. China.

In short, if the United States truly wants to succeed in becoming the world leader in EV production and other battery driven technologies, the Biden administration has no choice but to widen the U.S. supply chain and start competing for access to key sources of critical minerals around the world by aggressively pursuing critical mineral agreements with as many trading partners as possible.

The CX-5 is Mazda’s most popular vehicle, selling 365,135 units last year. Even with that volume, it was rumored to be living on borrowed time thanks to the launch of several newer models. But now it looks like the CX-5 will get a reprieve in the form of a new, third generation. 

According to Drive, the official launch date has yet to be finalized, but Mazda confirmed a new version of the CX-5 would be in showrooms along with the CX-50 and larger CX-90 SUVs. The new CX-5 will likely utilize a configuration similar to today’s model, including a four-cylinder engine, front-wheel drive, and optional all-wheel drive. 

It’s also highly likely the new Mazda CX-5 will feature a hybrid powertrain, similar to the one in the Toyota RAV4 or Corolla Cross. Toyota owns a five percent stake in Mazda, and the two companies have collaborated on several vehicles, including a Japan-market-only Mazda 3 hybrid. In the US, both the Toyota Corolla Cross and Mazda CX-50 are assembled at the Mazda Toyota Manufacturing plant in Huntsville, Alabama.  

Previously, Mazda announced plans to produce three electric vehicles, five plug-in hybrids, and five conventional hybrids by 2025. However, it has not indicated which models would offer versions of those powertrains. There are also rumors of several rotary-powered hybrids. Mazda has hinted that it might offer a rotary engine hybrid version CX-30 in the US and has filed patents for a sportscar using a rotary PHEV.  

Unlike past rotary-engined cars, the internal combustion engine will not power the CX-30’s wheels. Instead, it will generate electricity to recharge a 17.8 kWh battery, which provides an electric-only range of up to 53 miles. Jeff Guyton, Mazda’s North American CEO, said the automaker has not ruled out the return of the rotary to the US market but is currently prioritizing the CX-30’s launch in Europe and Japan. 

Instead, the US market gets the CX-90, a three-row SUV, a hugely popular vehicle in North America. It will be joined later this year by the CX-70, a two-row version of the CX-90, giving Mazda a complete lineup of SUVs, including the CX-5, for the foreseeable future.