Chrysler to close 5 additional auto plants
5/2/2009NEW YORK - Court documents filed by Chrysler Friday revealed the company plans to close five more plants - including one in Twinsburg, Ohio - by the end of next year.
Attorneys for Chrysler LLC said the company will file a motion by Saturday to sell substantially all of its assets to Italian automaker Fiat Group SpA, but that won't include those five plants, plus three others that already have been closed.
The five plants in Ohio, Michigan, Missouri, and Wisconsin employ about 4,800 people. Chrysler said they will be offered jobs at other plants. The two Michigan plants are in Detroit and Sterling Heights.
The plant in Ohio has 1,250 workers and is Twinsburg's biggest employer. That plant makes stampings, assemblies, and subassemblies that include hoods, quarter panels, and roofs.
Twinsburg Mayor Katherine Procop said she was stunned by the decision to close the plant because she was told during a conference call Thursday with Chrysler Chief Executive Robert Nardelli that the plant was going to be OK for the short-term. "They said it was a great plant with a tremendous work force," Ms. Procop said. "I'm very disheartened."
Two other plants that will be left out of the Fiat sale are the St. Louis South plant and an assembly plant in Newark, Del., that were idled last year. Another facility, Chrysler's Detroit Axle plant, is already scheduled to be replaced by a new factory near Port Huron, Mich.
The "new Chrysler" would lease the eight plants, then shutter them by December, 2010.
Judge Arthur Gonzalez approved a series of motions at yesterday's swift hearing, launching a chain of events designed to ensure Chrysler's bankruptcy process is the quick and "surgical" one the company and the U.S. government have promised.
But what could prove to be the case's biggest challenge lies ahead. Chrysler eventually must deal with creditors who refused to come to a deal that would have erased much of the automaker's debt and might have avoided a bankruptcy filing in the first place.
Another hearing was scheduled for Monday morning, where Chrysler attorneys will ask Judge Gonzalez to let the company start using $4.5 billion in loans from the U.S. and Canadian governments to keep operating under bankruptcy protection.
Chrysler attorney Corinne Ball, of the firm Jones Day, said the loans and the sale to Fiat represent "an important lifeline" for Chrysler's dealers, suppliers, and customers.
"We have to move at a good speed throughout this proceeding," she told Judge Gonzalez.
Among the motions approved by Judge Gonzalez was one to allow the automaker to pay $48.8 million in employee and contract worker prebankruptcy wages, benefits, and business expenses. The judge also approved Chrysler's motions that will let it continue to honor its warranties and continue its current banking practices.
Chrysler, the nation's third-largest car manufacturer, filed for bankruptcy protection Thursday after a group of creditors defied government pressure to wipe out the automaker's debt. The company plans to emerge in as little as 30 days as a leaner, more nimble company, with Fiat potentially becoming the majority owner.
Until the deal with Fiat closes, the automaker plans to idle all of its plants in the United States.
Chrysler's Canadian assembly plants also halted production yesterday because of parts shortages stemming from the U.S. shutdown.