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Published: Thursday, 12/18/2008

Chrysler to suspend production

BY GARY T. PAKULSKI
BLADE BUSINESS WRITER
The carmaker, which is in serious financial trouble and is seeking loans from the U.S. Treasury, said it must  keep production and dealer inventory aligned with U.S. market demand. The carmaker, which is in serious financial trouble and is seeking loans from the U.S. Treasury, said it must keep production and dealer inventory aligned with U.S. market demand.
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Citing rising inventories of unsold vehicles, Chrysler LLC said yesterday it will stop making all cars and trucks for a month starting tomorrow.

The move will affect 3,700 company employees in the Toledo area.

And the firm s Jeep assembly complex, whose vehicles have been piling up on dealer lots nationwide, won t reopen until Jan. 26, or a week longer than most other Chrysler plants, spokesman Dave Elshoff said.

All 30 factories operated by the carmaker will be closed until Jan. 19. The list includes a machining factory in Perrysburg Township, where 1,000 employees produce torque converters and other vehicle parts.

UAW officials could not be reached for immediate comment.

The Jeep complex, where the firm produces the Liberty and Wrangler and Dodge Nitro, is one of three plants slated for longer closings, the company spokesman said. The other plants are in Detroit and Windsor, Ont., where workers won t return until Feb. 2.

The closures are expected to affect 46,000 employees.

Company executives announced the development late yesterday afternoon in a written statement from their headquarters in Auburn Hills, Mich.

The carmaker, which is in serious financial trouble and is seeking loans from the U.S. Treasury, said it must keep production and dealer inventory aligned with U.S. market demand.

The global credit crisis is making it difficult for customers to obtain loans to buy vehicles, the statement said. The firm s dealers attribute 20 to 25 percent of recent sales declines to the situation, it continued.

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 the year. Chrysler is seeking $7 billion in government loans as it tries to survive the recession.

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.

Executives are waiting for word if the Bush Administration will extend funds from a special rescue package established for the banking industry.

In Washington last night, the White House said it was aware that U.S. automakers were taking action to cope with financial strains. White House spokesman Tony Fratto declined to comment directly on Chrysler s plan but said, Everyone s aware that the automakers are in a difficult financial condition, and they are taking action to deal with it.

That s why we re having these discussions, he added, referring to the Bush Administration s effort to determine how to aid ailing automakers.

President Bush said a decision was needed relatively soon on bailing out the industry.

The U.S. auto industry, including Chrysler, reported its worst monthly sales levels in 26 years in November.

Sales of the Toledo-made Jeep Liberty plunged 39 percent from a year earlier. Other Toledo-made vehicles also slipped in November, including the Wrangler, down 26 percent, and the Nitro, down 69 percent.

The Toledo assembly complex has been operating on just one shift throughout most of December. It employs 2,700 people.

Also in Ohio, Chrysler has about 1,000 employees in Twinsburg. Twinsburg s stamping plant is the town s largest employer, and its jobs provide for 18 percent of the tax base in the city southeast of Cleveland.

The carmaker s Toledo-area operations had been scheduled to close Dec. 24 to Jan. 2 for their usual Christmas holiday shutdown.

Chrysler is owned by New York private equity firm Cerberus Capital Management LP.

The Chrysler announcement came on a day when other domestic auto producers also announced extensions of holiday shutdowns.

About 1,300 hourly workers at General Motors Corp. Toledo Powertrain plant were told yesterday that the Alexis Road plant will be idled until Jan. 20, starting tomorrow.

Wanda Wellman, plant spokesman, cited slow sales of vehicles containing the plant s six-speed, rear-wheel drive transmissions.

Ford Motor Co. said it will shut 10 of its North American assembly plants for an extra week after the holidays.

Information from The Blade s news services was used in this report.

Contact Gary Pakulski at:gpakulski@theblade.comor 419-724-6082.



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