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.


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.


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.