Chrysler Idles 2 Plants, 5800 Workers

[skylight]

October 14, 2003

DaimlerChrysler AG has pulled two assembly plants off line this week to prevent unsold vehicles from piling up on dealer lots.

The Chrysler Group confirmed Monday that it had temporarily closed assembly plants in Sterling Heights and Toluca, Mexico, a DaimlerChrysler spokeswoman said. The Sterling Heights plant builds midsize cars, and Toluca builds the PT Cruiser.

Mary Beth Halprin, DaimlerChrysler spokeswoman, said the shutdowns, which temporarily idled 3,200 workers in Sterling Heights and 2,600 workers in Toluca, are part of the company's effort to control inventories of unsold vehicles.

The Chrysler Group has not yet confirmed that it also plans to shut down its Windsor, Ontario, assembly plant at the end of October, Halprin said. Officials from the Canadian Auto Workers, however, said early this month that a temporary shutdown of the critical Windsor plant is in the works.

The temporary shutdowns underscore the continuing challenges faced by the beleaguered Chrysler Group, which now appears headed for its third financial loss in four years.

The temporary shutdowns along with the model changeovers at plants in Newark, Del., and Brampton, Ontario, coupled with steep, double-digit drops in sales and a $1.2 billion loss, have made it difficult for the Chrysler Group to achieve its goal of making a profit, observers have concluded.

Dieter Zetsche, the Chrysler Group chief executive, who has remained bullish on the outlook for the group despite the drop in sales and market share, appeared to acknowledge as much last week when he told a new service reporter it could be difficult for Chrysler to post a profit in 2003.

The Chrysler Group's continuing problems have prompted speculation Zetsche could be forced to implement additional cost-cutting that could require eliminating more jobs.

The original turnaround plan implemented in 2001 called for eliminating 26,000 jobs worldwide, and the new labor pact with the United Auto Workers calls for eliminating another 1,500 jobs with the shutdown of the company's Indianapolis Foundry and McGraw glass plant in Detroit as soon as the end of the year.

Lindsay Brooke, an analyst with CSM Inc. in Farmington Hills, said the Chrysler Group is facing a series of interlocking challenges. "They still have a reputation for second-tier quality," said Brooke.

At the same time, the vehicles that helped boost the company's sales in the 1990s, such as the minivans and sport utility vehicles, now face "just withering" competition, he said.

Brooke, however, said the recent successful launch of the Durango is still somewhat problematic. The Durango, which is facing stiff competition, is on a unique platform, and so far DaimlerChrysler has no plans for derivatives that could help spread the cost of building the vehicle across a larger volume.

In addition, Chrysler's passenger car sales have continued to decline. So far this year, Chrysler's passenger car sales are down 14 percent. Sales of the PT Cruiser have dropped 25 percent through the first nine months of the year.

Chrysler has tried to stem the falling sales with marketing programs and changes to the product, but so far they have not succeeded in bringing in more customers.

Minivan sales are down 9 percent and SUV sales are down 5 percent. The decline in SUV sales has accelerated in recent months, however, despite the heavy use of incentives. The Chrysler Group's SUV sales dropped 18 percent in September.

Zetsche was in Newark, Del., last week for the launch of the new Dodge Durango, which he said is the start of a product offensive that will bring in new buyers.

"Today marks the beginning of 10 new product launches for Chrysler, Jeep and Dodge by the end of 2004 and our manufacturing operations play a critical role in the successful introduction of these vehicles," Zetsche said. "The same rigorous efforts at Newark Assembly that have improved quality and flexibility will be incorporated into our other plants as we ramp up for new vehicl

[therents]

Well it's to bad. At least everyone on this fourm has done their part to support Chrysler or we wouldn't be here! [?]

[Punch]

I also heard that they had to shut down the srt-4 assembly line, until further notice due to engine problems.

[GTSteve]

quote:Originally posted by Punch

I also heard that they had to shut down the srt-4 assembly line, until further notice due to engine problems.

Are you sure? Can you give us a link to a site?