Legal Lessons From Automotive Supply Chain Attorney Dan Sharkey

Auto Supply Chain Prophets

Not everyone has their finger on the pulse of what’s happening in the auto supply base today. But among the few who do is attorney, co-founder and member of Brooks Wilkins Sharkey & Turco PLLC Dan Sharkey. A well-known legal expert specializing in supply chain contract disputes, Dan knows that the world of automotive is now facing some of its biggest challenges.

In this episode of Auto Supply Chain Prophets, Dan shares insight at the 2022 Original Equipment Suppliers Association (OESA) Annual Automotive Supplier Conference in Novi, Michigan. He takes us through the complex challenges and risks faced by automotive suppliers in today’s precarious world.

Themes discussed in this episode:

• Why we should focus on EV over autonomous
• The two big issues facing automotive right now
• How suppliers should manage increasing volatility and what that means legally
• The tension between suppliers and OEMs
• What it means to contract business you really want
• Why you shouldn’t be afraid to fire customers
• 
  

Featured on this Episode

Name: Dan Sharkey

Title: Co-founder and member of Brooks Wilkins Sharkey & Turco PLLC

About: With more than 60 trials behind him, attorney Dan Sharkey has expertise in business and commercial contracts and litigation — especially automotive supply chain contract disputes.

Connect: LinkedIn

Episode Highlights

Timestamped inflection points from the show

[2:12] It’s electrifying!: Autonomous automotive might be a decade or two off, but there are big challenges ahead for electrical — from pricing to volatility and releases.

[3:38] Get ready for the B word: How should suppliers best manage volatility? Hint: breach.

[4:47] Futureproof the schedule: OEMs have so many issues — from unions to chips and freight — they can’t meet suppliers with a firm plan. A lot of risk ensues.

[5:58] The one thing: Dan is a firm believer that the automotive industry should “contract deliberately, not by default.” Make sure that it’s business you really want.

[3:38] It’s just business: Suppliers should be careful not to outsell capacity. If this means firing the worst customer every year, so be it. (You’ll be better off anyway.)

Top quotes

[2:14] Dan: “Electrification feels very long term. I think a lot of people were skeptical about one or the other, but now they're saying, autonomous might be a while — a decade or two — but electrification is happening really fast.”

[5:58] Dan: “Contract deliberately, not by default. You worked so hard to get the business, building relationships and responding to RFQs. [When] you finally get the PO, your instinct is to celebrate. Selling parts is tough, but you've got to take a deep breath and say, What did I really just get? … What do I really need out of this contract? When you're happy, take a deep breath, and make sure it's business that you really want.”

[6:59] Dan: “We have clients who are super technical [and] great executors. Sales can survive. The most troubled clients we have have great sales teams, but the backend operations don't support it, and they can't swallow the capacity. … Sales is super important, it's your face to the customer, but don't outsell your capacity.”

[7:35] Dan: “If you fire one really bad customer every year, you'll be happier. … Find that one customer you're not making money on and say hey, not that we're going to stop shipping tomorrow, but we're going to get out of this, and we're going to have an orderly exit over the next six to 12 months. And so many people look at you funny, like, Well, wait a minute, we're trying to get business. But once they go through that process, it's so much better.”