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NEW YORK — A judge on Wednesday ordered a key supplier of American Axle & Manufacturing Holdings Inc. to resume steel deliveries, easing concerns that the auto parts maker would cease production and disrupt automakers' supply base.
The custom-made steel supplied by Republic Engineered Products Inc. is crucial to American Axle's business operations, according to Oakland County, Mich., Circuit Judge Nanci Grant. Republic halted its steel shipments last month, seeking volume commitments and pointing to American Axle's weak financial state.
American Axle argued that Republic wrongfully backed out of a four-year contract.
The ruling eases worries that American Axle, a major parts maker of General Motors Corp., would have to cease production because of a supply shortage. A major fear in the crippled auto industry is that a lower-tier supplier fails, disrupting the entire supply chain and potentially stopping automakers from producing cars.
An American Axle spokeswoman declined to comment on the ruling but called Republic's steel "critical" to producing its products, which include axles, transmission components and other parts. A spokesman for Canton, Ohio-based Republic was traveling and unavailable for immediate comment.
Although Grant ruled in favor of American Axle, she also ordered the company to follow an accelerated payment plan for the steel.
The Detroit-based supplier has been hit hard by the auto industry downturn. It has closed plants and laid off thousands of employees to cope with the decline in automobile production.
In March, its auditors issued a so-called "going concern" warning, raising doubts about the company's ability to continue operations.
Shares of American Axle rose 40 cents, or 14.3 percent, to $3.20 Wednesday.
