Chrysler Forced To Shut 4 Plants As Suppliers Stop Shipments
02 May 2009 - 4:11AM
Dow Jones News
Chrysler LLC has shut down four of its assembly plants as some
parts suppliers stop shipments following the auto maker's
bankruptcy filing.
The auto maker confirmed Friday it has closed its two Canada
plants, as well as its Sterling Heights and Warren assembly
facilities, both in Michigan. The closures come as Chrysler gets
set to idle all of its U.S. plants beginning Monday for the 60 days
that the company expects the bankruptcy process to last.
News of the early plant shutdowns provides an indication of the
dramatic impact that Chrysler's bankruptcy stands to have on
suppliers and manufactures. Suppliers, battered by 18 months of
production cutbacks by their auto making customers, are bound to
suffer from even-deeper production cuts. As suppliers' fortunes
fade, all manufacturers could find themselves without the parts
they need to maintain operations.
The effect of Chrysler's two-month shutdown is compounded by the
fact GM plans to take down as many 13 North American plants to
control inventory. American Axle & Manufacturing Holdings Inc.
(AXL), a major supplier to both companies, said Friday it expects
to lose $250 million in sales revenue as the factories shut for
most of the summer.
Chrysler warned in court filings Thursday that many parts makers
could follow the auto maker into Chapter 11 without a quick
conclusion to its bankruptcy process.
"Without a clear timeline for when the (bankruptcy) situation
will end and production will resume, I believe we will see massive
suppliers bankruptcies that will stop Chrysler from resuming
production," Chrysler's procurement officer Scott Garberding said
in a statement filed with the bankruptcy court Thursday.
Of Chrysler's top 100 parts makers, 84 also provide parts to
General Motors Corp. (GM) and Ford Motor Co. (F). The majority of
those suppliers also provide parts to the foreign auto makers
operating in the U.S. such as Toyota Motor Co. (TM)
Garberding, who said he spent as much as 40% of his time working
on economically stressed suppliers, warned that the sector is in a
fragile state. About 10% of Chrysler's suppliers were listed as
"high risk, risk or concern" by the company in October 2008, but
the percentage rose to about 30% in March, Garberding said.
-By Jeff Bennett, Dow Jones Newswires;
jeff.bennett@dowjones.com; 248-204-5542
(Sharon Terlep contributed to this article)