DETROIT (AP) - Chrysler LLC said Wednesday that it is closing
all 30 of its manufacturing plants for a month starting Friday as
it seeks to counter the most severe downturn in U.S. auto sales in
more than two decades.
By extending the traditional two-week holiday shutdown period,
the struggling Auburn Hills, Mich.-based automaker can adjust
production to slowing demand and conserve cash.
In a statement Wednesday, Chrysler said tighter credit markets
are keeping would-be buyers away from its showrooms. The company
said its dealers are unable to close sales for buyers due to a lack
of financing, and estimate that 20 to 25 percent of their volume
has been lost due to the credit situation. Sales in November slid
Chrysler and larger rival General Motors Corp. have warned they
could run out of cash within weeks without financial aid from
Washington. Chrysler has said its cash will drop to $2.5 billion by
Dec. 31, the minimum needed to meet payroll, pay suppliers and run
the company. It would have trouble paying bills after the first of
Operations will be idled at the end of the shift on Friday, Dec.
19th shift. the earliest plants will reopen is Jan. 19, 2009. A few
plants will reopen on Jan. 26.
Chrysler is seeking $7 billion in government loans as it tries
to survive the recession and the worst U.S. auto sales slump in 26
years. For the first 11 months of this year, Chrysler sales are
down 27.7 percent to 1.4 million vehicles from 1.9 million for the
same period last year.
With the U.S. sales slump expected to continue into January,
traditionally one of the slowest sales months of the year, the
company has little revenue coming in and must pay suppliers $7
billion every 45 days.
In the case of some plants, such as the Toledo Jeep plant in
Ohio, operations will resume January 26, but with one less shift.
More than 750 workers are being cut on the second shift at the
Toledo North plant, said Dan Henneman, United Auto Workers union
official for Local 12.
Chrysler's Jeep Liberty, Nitro and Wrangler are assembled at the
Ohio plants. Sales of the company's Jeep-brand vehicles fell 41.8
percent in November to 20,302 units.
Henneman said 755 people worked the shift. About 550 workers
took a retirement package and 200 will be indefinitely laid off.
General Motors Corp. and Ford Motor Co. have announced
extensions of their holiday shutdowns as well.
Chrysler is privately held, with 80.1 percent owned by New York
private equity firm Cerberus Capital Management LP.
(Copyright 2008 by The Associated Press. All Rights Reserved.)