The ongoing tension between General Motors and its key steering supplier Nexteer Automotive has escalated into a significant supply chain disruption centered on the Primax electric power steering (EPS) system. That said, this dispute highlights the fragile nature of just-in-time manufacturing and the high stakes involved when a single-source component becomes a bottleneck for North America’s most profitable vehicle lines. As GM works to protect its full-size truck and SUV franchise, the conflict offers a stark case study in automotive procurement strategy, intellectual property rights, and the apply suppliers hold when they control critical technology.
The Core of the Conflict: What is the Primax System?
To understand the severity of the disruption, one must first understand the component at the center of the storm. In practice, the Primax system is Nexteer’s flagship column-assist electric power steering architecture. Unlike traditional hydraulic systems or rack-mounted EPS units, the Primax integrates the motor, controller, and sensors directly onto the steering column Turns out it matters..
This design offers distinct advantages for the GM truck platform—specifically the Chevrolet Silverado, GMC Sierra, and their heavy-duty variants, along with the full-size SUVs like the Tahoe, Suburban, Yukon, and Escalade. By mounting the assist unit on the column, engineers free up valuable space in the engine bay and on the front frame rails. This packaging efficiency is crucial for vehicles offering multiple powertrain options, including the 6.Day to day, 2L V8, the 3. 0L Duramax diesel, and the new EV platforms sharing the body-on-frame architecture.
Because the Primax is a single-source component—meaning GM does not have a qualified secondary supplier ready to ship at volume—any interruption in Nexteer’s delivery capability immediately halts the production lines at plants like Flint Assembly, Fort Wayne Assembly, and Arlington Assembly No workaround needed..
Genesis of the Dispute: Contractual Friction and IP Ownership
The roots of the current supply dispute are multifaceted, stemming from a collision of commercial terms, intellectual property (IP) definitions, and post-pandemic economic realities That's the whole idea..
Pricing Escalation and "Economic Adjustment" Clauses
Like many supplier-OEM relationships, the contract governing the Primax supply includes provisions for price adjustments based on commodity indices (steel, aluminum, rare earth magnets for motors, semiconductor costs). Following the 2021–2023 inflationary spike, Nexteer reportedly sought significant price increases to offset margin erosion. GM, adhering to its rigorous cost-down targets, resisted the magnitude of these increases, arguing that the supplier should absorb a portion of the volatility through productivity gains—a standard expectation in automotive purchasing contracts It's one of those things that adds up..
The Intellectual Property Standoff
Perhaps the most contentious element involves IP ownership and data rights. As vehicles become software-defined, the firmware controlling the Primax steering calibration—steering feel, return-to-center behavior, pull-drift compensation, and integration with Super Cruise hands-free driving—has become as valuable as the hardware itself Took long enough..
Nexteer has historically maintained tight control over the source code and calibration methodologies for its EPS controllers. GM, however, has been pushing aggressively across its supply base for "white box" or "gray box" access—demanding full source code ownership or at least the right to modify calibration parameters independently. Practically speaking, this shift is driven by GM’s Ultifi software platform strategy, which requires seamless over-the-air (OTA) updates and deeper integration of chassis controls. The dispute reportedly intensified when GM requested access to the Primax controller source code to make easier faster OTA deployment for safety recalls or Super Cruise enhancements, a request Nexteer viewed as a breach of their proprietary technology agreements It's one of those things that adds up..
Tooling and Capacity Allocation
A third friction point involves tooling ownership and capacity allocation. Nexteer’s primary North American EPS production occurs in Saginaw, Michigan. During the chip shortage, GM reportedly utilized "priority allocation" clauses to secure limited semiconductor inventory for its high-margin trucks, potentially starving other Nexteer customers. Conversely, Nexteer may have allocated limited labor or machine capacity to other OEM programs (such as Ford, Stellantis, or Chinese OEMs via its parent company, Pacific Century Motors) where margins were more favorable or contractual penalties less severe.
Operational Impact: Stopped Lines and "Build-Short" Strategies
The theoretical contract dispute became a tangible crisis when Nexteer reportedly failed to meet daily delivery schedules (DDS) for the Primax units in late 2023 and early 2024. The consequences were immediate and visible on GM’s balance sheet And it works..
Production Line Stoppages
Flint Assembly (Heavy Duty trucks) and Fort Wayne Assembly (Light Duty trucks) experienced unplanned downtime. In the automotive industry, an unplanned line stop costs an estimated $1.3 million to $2.5 million per hour in lost contribution margin, overtime recovery costs, and logistics expediting. For the full-size truck franchise—which generates the vast majority of GM’s North American EBIT-adjusted profit—even two days of lost production represents hundreds of millions in deferred revenue.
The "Build-Short" (Ship-Short) Protocol
To keep lines moving while awaiting resolution, GM implemented a "build-short" strategy (internally often called "ship-short" or "deferred build"). Trucks were assembled down the line without the Primax steering column installed. A placeholder bracket or dummy unit was fitted to maintain structural integrity, and the vehicles were parked in "holding lots" (often vast fields surrounding the plants or rented storage facilities) awaiting the arrival of the steering columns That's the part that actually makes a difference. Turns out it matters..
This approach creates a secondary logistical nightmare:
- Quality Risk: Retrofitting a safety-critical steering column in a parking lot or secondary facility lacks the controlled torque-to-yield processes, scan-tool calibration verification, and end-of-line testing of the main assembly line.
- Still, Inventory Carrying Cost: Thousands of unfinished trucks tie up working capital (WIP inventory) and require massive yard management. Consider this: 3. Dealer & Customer Dissatisfaction: Delivery dates slip unpredictably, damaging brand loyalty in a segment where fleet customers and retail buyers have high expectations.
Strategic Implications: Why Single-Sourcing Persists
Observers often ask: Why doesn't GM just dual-source the Primax? The answer reveals the complexity of modern chassis engineering Practical, not theoretical..
The Engineering Lock-In
The Primax is not a commodity bolt-on part. The steering column geometry, the instrument panel mounting points, the driver airbag deployment trajectory, the column collapse mechanism (for crash safety), and the wiring harness architecture are all co-developed around the specific Primax envelope. Switching to a competitor (like JTEKT, Bosch, ZF, or ThyssenKrupp) would require a complete re-engineering of the vehicle’s front-end architecture—a 24-to-36-month program timing endeavor costing hundreds of millions in tooling and validation Simple, but easy to overlook..
The "Make vs. Buy" Calculation
GM once owned Saginaw Steering Gear (the predecessor to Nexteer). They spun it off in 2009 (eventually sold to Pacific Century Motors in 2010) to shed legacy costs and capital intensity. Bringing steering back in-house ("insourcing") is theoretically possible—GM has the Ultifi software capability and the manufacturing footprint—but the capital expenditure (CapEx) for EPS motor winding, magnet assembly, and controller PCB fabrication is massive. For a legacy component on a platform nearing mid-cycle, the ROI rarely justifies the investment.
The China Factor
Nexteer’s ownership by Pacific Century Motors (PCM), a Chinese state-linked entity, adds a geopolitical layer. While Nexteer operates as a US-headquartered company with a US board and CFIUS (Commit
tee on Foreign Investment in the United States) mitigation agreements in place to firewall sensitive defense and autonomous driving IP, the ownership structure complicates matters for a Detroit automaker navigating "Buy America" provisions, IRA tax credit eligibility, and escalating trade tensions. It effectively eliminates the make use of GM might otherwise exert by threatening to shift volume to a domestic rival—because no domestic rival currently exists at the required scale and technological readiness for this specific architecture Simple, but easy to overlook..
Worth pausing on this one And that's really what it comes down to..
The Industry-Wide Reckoning
So, the Primax shortage is not an isolated GM problem; it is a symptom of a structural fragility embedded in the "Just-in-Time" (JIT) manufacturing philosophy that has dominated the industry for four decades Most people skip this — try not to. And it works..
The Tier-1 Consolidation Trap
Over the last twenty years, OEMs relentlessly pushed for Tier-1 consolidation—fewer suppliers, bigger contracts, lower unit costs. This created "Too Big to Fail" suppliers like Nexteer, Bosch, and ZF. When a single supplier holds 60–80% market share for a critical safety system across multiple OEMs (Nexteer supplies Ford, Stellantis, and others alongside GM), a single point of failure—a fire, a cyberattack, a labor dispute, or a semiconductor allocation error—cascades instantly across the entire North American light-truck market. The redundancy that once existed in a fragmented supply base has been optimized out of existence.
The Semiconductor Asymmetry
The shortage also exposes the power imbalance between the auto industry and the semiconductor foundries. Steering columns like the Primax require mature-node MCUs (Microcontroller Units) and power MOSFETs—chips built on 28nm to 180nm processes. Foundries (TSMC, GlobalFoundries, Infineon, NXP) have prioritized capital expenditure toward advanced nodes (3nm, 5nm) for AI and mobile, leaving mature-node capacity structurally constrained. Automakers, accustomed to dictating terms to suppliers, find themselves at the back of the queue behind Apple, Nvidia, and data center operators. The "Zero Trust" supply chain strategies now being adopted—stockpiling die banks, signing long-term capacity agreements (LTCA) directly with foundries, and even investing in fabs (as Ford and GM have done with GlobalFoundries)—are a tacit admission that the old model is broken.
The Software-Defined Vehicle (SDV) Accelerant
Ironically, the pivot to Software-Defined Vehicles is increasing the electronic content per steering column, not decreasing it. Steer-by-wire systems (eliminating the mechanical shaft entirely), redundant EPS motors for L3/L4 autonomy, and Over-the-Air (OTA) update capability require more silicon, more complex PCBs, and higher validation rigor. The Primax is a bridge product; its successor will be exponentially more complex, raising the barrier to entry for new suppliers even higher and deepening the incumbency advantage of the current Tier-1s.
The Path Forward: Resilience Over Efficiency
GM’s response—and the industry’s necessary evolution—requires a fundamental shift in Key Performance Indicators (KPIs) for procurement and engineering Took long enough..
1. Design for Supply Resilience (DfSR): Engineering teams must treat "supply base breadth" as a hard design constraint, equal to mass, cost, and packaging. This means standardizing mounting interfaces, communication protocols (CAN-FD/Ethernet), and voltage ranges across potential suppliers before Start of Production (SOP), enabling a "plug-and-play" swap if a primary source fails. It requires accepting a 3–5% piece-cost penalty for modular architecture to avoid a 100% revenue stop Turns out it matters..
2. Strategic Buffer Stocks for "Class A" Components: Safety-critical, single-sourced, high-complexity modules (steering columns, brake boosters, ADAS domain controllers) cannot be managed on a 2-week JIT horizon. OEMs must finance and manage strategic buffer inventories—measured in weeks, not days—held at supplier sites or dedicated logistics hubs, treated as insurance premiums against line-down events.
3. Vertical Integration of Silicon: The "GM + GlobalFoundries" model must expand. Securing wafer allocation is no longer a purchasing function; it is a product development prerequisite. OEMs need "chip-to-car" traceability and the ability to influence foundry process roadmaps to ensure 15-year automotive-grade supply continuity Nothing fancy..
4. Contractual "Surge Clauses": Long-term supply agreements (LTSAs) must include legally binding surge capacity obligations—validated, tooled, and staffed "warm" capacity that a supplier must activate within 30–60 days of a disruption declaration, backed by significant liquidated damages for non-performance.
Conclusion
The trucks sitting in the holding lots around Flint, Fort Wayne, and Silao are more than inventory; they are physical monuments to the limits of hyper-optimization. The Primax shortage forced General Motors to choose between the illusion of efficiency and the reality of delivery—and the cost of that choice is measured in billions of dollars
