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Discussion Starter · #1 ·
Have any of you read this yet? It was in today's post dispatch (Saint Louis).


DETROIT — Chrysler LLC and struggling parts supplier Plastech Engineered Products Inc. have resolved a dispute that led Chrysler to suspend production at four assembly plants.

The deal announced Tuesday paves the way for Plastech to resume sending parts to the automaker and means Chrysler can restart production at the assembly plants that had been closed due to a lack of interior and exterior parts.

A shift was cut at a fifth plant as the financial dispute threatened to close all 14 Chrysler assembly factories

EARLIER STORY
A dispute between Chrysler LLC and parts supplier Plastech Engineered Products Inc. forced Chrysler to shut down or cancel a shift at five factories Monday, including one in Illinois. And the automaker said it could idle all 14 of its assembly factories.

Plastech supplies Chrysler with about 500 plastic interior, exterior and powertrain components for nearly all of its vehicles, according to a suit Chrysler filed Friday in Bankruptcy Court in Detroit.

The automaker is seeking the tools used by Plastech to make the components.

Chrysler says it owns the tools. Without the tools, Chrysler says, it eventually will have to cease production of vehicles systemwide.

Chrysler spokeswoman Michele Tinson said Plastech is a supplier to both its assembly facilities in Fenton, but she could not say whether there would be any impact on production at those facilities.

Plastech supplies engine covers, grill panels, moldings, metal stampings, door panels, floor consoles, safety restraint system components and other parts to Chrysler, Ford Motor Co., General Motors Corp. and Toyota Motor Corp., according to the company's website.

Chrysler ended its contracts with the Dearborn, Mich.-based supplier Friday, before Plastech filed for Chapter 11 bankruptcy protection. In its suit, Chrysler claimed Plastech no longer can meet its production demands.

Plastech's contracts with the automaker were worth about $200 million, Plastech spokesman Kelvin Scott said. Plastech does about $1.3 billion in total business, he said.

"We are continuing to supply parts to our other customers,

including Ford and GM," he said. But on Monday morning, Chrysler announced plans to temporarily close four assembly plants and shut down one shift at another, affecting about 10,500 workers.

Plants to be closed are in Belvidere, Ill.; Sterling Heights, Mich.; Newark, Del.; and Toledo, Ohio, while the second shift at Toledo Supplier Park in Toledo will be dismissed, the company said.

Employees at the Sterling Heights stamping plant were sent home early Friday night and after four hours of work Monday, union steward Russell Phillips said.

"We have no extra stock," said Phillips, who adds that Chrysler works on a "just-in-time" policy for parts delivery.

"Most of (the workers) are saying: 'This is what they get for not wanting to keep stock in the house,'" Phillips said.

Chrysler has reduced its inventory substantially since it became bloated last year, said Aaron Bragman, an auto industry analyst for the consulting company Global Insight.

The "just-in-time" strategy cuts down on inventory costs, but also leaves automakers with a delicate balancing act.

Auto companies want enough inventory to have a buffer and don't want it to become depleted, Bragman said.

The shutdown could help Chrysler pare its vehicle inventory. The company had 413,874 vehicles in its inventory last month, a 75-day supply, according to Wards AutoInfoBank.

Of the vehicles made at the four factories that were idled, the Dodge Durango sport utility vehicle, had the lowest supply in January, at 46 days, according to Wards. The largest supply is the Jeep Wrangler, at 117 days.

Although Chrysler has an inventory of vehicles made by the plants, it will not benefit from any plant closures, Bragman said.

"When a plant is idle, you're not making any money," he said. "You've got people standing around, so it's just a cost."

Even if Chrysler lays off workers, they would still get most of their pay under their contract with the United Auto Workers.

The shutdowns are having a ripple effect as auto parts maker Dana Corp. canceled Monday night's second shift at its modules plant in Toledo.

One industry analyst said the production slowdown may be short because Chrysler should have little trouble finding new companies to replace Plastech.

Faced with stiff competition and a shrinking market, many suppliers are willing to take on work if it means getting contracts, said Craig Fitzgerald, a partner in Plante & Moran's Strategy and Global Services Group.

"Suppliers in the tier-one to tier-four level are severely challenged," Fitzgerald said Monday. "Production values are declining, there is high debt, weak earnings and cash flow, and difficulty in getting credit."

Chrysler's work shutdown should last no more than a week or two, Fitzgerald said.

"I think they will not have any problems filling the void," he said. "There is a lot of excess capacity. Chrysler would do everything it can to get up and running."
 

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Discussion Starter · #2 ·
This may be bad news for those of you who just ordered a new car... I am thinking I may be affected too. We will have to wait and see... Oh yeah, this was posted yesterday, not today, sorry about that.
 

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It was MB that brought Chrysler down. Cheysler is now in the rebuilding faze, and I do feel they will turn out fine in a yr or two.
 

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This is a regular occurance here in Michigan with the auto industry. These issues (that cause them to stop production) usually don't last long.
 

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I hope this isn't bad news but like it was said we'll see.I was given a delivery date too so now I guess its the waiting game.
 

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Discussion Starter · #6 ·
I hope this isn't bad news but like it was said we'll see.I was given a delivery date too so now I guess its the waiting game.
Any news on your car yet? Did your delivery date hold true?
 
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