General Motors is begrudgingly paying higher steel prices to two suppliers to avoid disrupting its business, but has sued the two companies over the hikes.

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According to Associated Press (AP), GM filed suit last Friday against steel maker Steel Dynamics and Textron Inc., a major supplier of steel fasteners for GM vehicles. The suits, which reportedly seek a declaratory judgment and damages, contend the higher prices violate contracts with the carmaker.


“Both suppliers are seeking to impose a premium on an already-agreed-upon, fixed-price contract,” GM spokesman Tom Hill told AP on Tuesday, adding: “We declined to pay those premiums. When they threatened to stop shipments, we agreed to pay under protest and filed the lawsuits.”


A spokesman for Steel Dynamics, based in Fort Wayne, Ind., declined to comment to AP and referred questions to a company lawyer, who did not immediately return a phone message. Textron officials in Providence, R.I., also did not immediately return a call from the news agency.


AP noted that rising steel prices are intensifying cost pressures in the already cut-throat business of building vehicles – although Ford and DaimlerChrysler’s Chrysler Group said they have not filed similar lawsuits against steel suppliers.

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In the past, long-term contracts with steel producers helped protect carmakers from drastic cost increases during recent steel price hikes but steel prices have risen roughly 30% in the past few months, thanks to a weak US dollar and intense demand from China, Associated Press said.