Thread: Chrysler says to shut down all production for month

Chrysler says to shut down all production for month

Chrysler to stop production for a month Play Video AP – Chrysler to stop production for a month


DETROIT (Reuters) – Citing a credit crisis and dwindling sales, Chrysler LLC on Wednesday said it would shut down all of its manufacturing operations from the end of this week for at least a month.

The blanket shutdown marked a deepening of the financial crisis for the embattled U.S. auto industry and came as Chrysler and its larger rival General Motors Corp both seek to shore up cash as they seek a federal bailout they say they need to survive.

Chrysler, considered the weakest of the Detroit automakers, made the announcement on its plant shutdown in a letter sent on Wednesday to its employees, suppliers and the United Auto Workers union that was also posted on its website.

Chrysler said its dealers were getting car shoppers into showrooms but losing between 20 percent and 25 percent of those potential sales because of the lack of consumer financing for new car purchases.

"As a result of the financial crisis, the automotive market remains depressed due to the continued lack of consumer credit for potential buyers," the automaker said in a statement.

Separately, Chrysler said its finance arm could be forced to stop making loans dealers use to finance inventory because the dealers have been pulling money out from a fund that helps finance the floorplan loans.

The shutdown by Chrysler will idle plants in the United States, Canada and Mexico producing vehicles for its Chrysler, Jeep and Dodge brands.

The more than 30,000 Chrysler workers in the United States represented by the UAW receive nearly full benefits and wages during plant shutdowns, but labor costs represent only about 10 percent of the total cost of the average vehicle.

By idling plants, Chrysler and other automakers can cut costs on inventory, components and related charges such as utilities for operating large production facilities.

The moves also keep finished vehicle inventories from piling up on dealer lots and increasing the pressure for even greater discounting to consumers.

GM said last week that it was cutting its first-quarter production schedule by 60 percent compared with the same period a year earlier.

Privately held Chrysler is 80-percent owned by private equity firm Cerberus Capital Management.

Chrysler's sales plunged 47 percent in November and were down almost 28 percent for the first eleven months of 2008.

http://news.yahoo.com/s/nm/20081217/bs_ ... r_shutdown

Just a blackmail tactic.

Chrysler should not be at the bailout begging table in the first place. They are owned by a private investment group, not mom and pop stockholders. If the owners are not putting in any more money, then why the pudding should US taxpayers?
Does anyone feel that there are too many cars on the road these days? With loss of jobs, the appetite for new cars is not robust. Neither is the appetite for new homes since there is about a 10 month backlog of slightly used homes for sale.

I don't feel sorry for any of them. It is a problem of their own making. A bailout would not help them anyway. I heard on the news that most people are not in the market for a new car right now and the ones who are cannot get loans. No buyers and they sink anyway. I would just as soon they sink without our hard earned money!