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Chrysler to Shutter Plants for a Month as U.S. Sales Drop

December 18, 2008
Related Topics: Downsizing, Wages and Hours, Workforce Planning, Latest News
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Chrysler says the ongoing credit crisis and plunging sales are forcing it to shut down all its factories for a month, extending its normal holiday shutdown.

Chrysler announced Wednesday, December 17, that all North American plants will be idled at the end of production Friday. “Impacted employees’’ won’t return to work before January 19, according to a statement on the company’s Web site Wednesday.

The shutdown affects 30 plants, including all assembly, power-train, component and stamping operations. The company has 46,000 hourly workers, most of them in the U.S., Canada and Mexico, a representative said.

Chrysler had already planned to extend its normal holiday shutdown, which was slated to run December 24 through January 2, to include December 22 and 23. That means Chrysler will drop an additional two weeks of production if workers return on January 19.

Chrysler’s U.S. sales have fallen 27.7 percent so far this year. The decline steepened this fall as credit markets tightened. Chrysler sales fell 47.1 percent in November, the biggest drop of any carmaker.

Chrysler has joined General Motors and Ford Motor Co. in pleading for a financial bailout in Washington. Chrysler asked for a $7 billion bridge loan. Chairman Bob Nardelli told lawmakers that the company could run out of money in the first quarter of 2009 without the loan. The fate of the bailout is in the hands of the White House after it failed to clear the Senate last week.

Nardelli told Congress the company would end 2008 with $2.5 billion in cash on hand. He said the company would owe suppliers $8 billion in the first quarter alone. That accounts for the lion’s share of Chrysler’s estimated $9.4 billion in first-quarter expenditures, he said in testimony. He said Chrysler burned through $1 billion a month in the third quarter.

In a recent meeting at corporate headquarters, members of Chrysler’s dealer council said lack of consumer credit was stifling sales.

“Chrysler dealers confirmed to the company at a recent meeting at its headquarters that they have many willing buyers for Chrysler, Jeep and Dodge vehicles but are unable to close the deals, due to lack of financing,” said a Chrysler statement.

By December 31, Chrysler will have slashed its workforce by 32,000 since its restructuring started in February 2007. That includes 5,000 white-collar employees who took buyout and early retirement packages November 26. As part of the restructuring, Chrysler has cut 12 factory shifts, taking out 1.2 million units of annual production—30 percent of its total production.

Filed by Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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