Chrysler announced it was closing all its North American manufacturing plants for at least a month, the starkest move taken by US automakers as they anxiously await word about government loans.
All three companies have been taking dramatic steps as they struggle to survive the recession and US sales have dipped to their slowest rate in 26 years. Chrysler and General Motors (GM) fear they might not have enough money to pay their bills in a matter of weeks.
Attempting to cut costs, GM was halting construction of a plant tied to one of its most important projects, the Volt. Ford also said it would shut down 10 plants for an extra week next month because of sluggish sales.
PHOTO: AFP
Chrysler said on Wednesday it would extend the normal two-week holiday shutdown that begins today to at least Jan. 19 at all 30 of its factories because of slumping sales.
The lack of consumer credit is hampering sales and forcing the production cuts, Chrysler LLC said in a statement. Chrysler, Jeep and Dodge dealers say they have willing buyers for vehicles, but they can’t close the deals, Chrysler said.
“The dealers have stated that they have lost an estimated 20 to 25 percent of their volume because of this credit situation,” the statement said.
The administration of US President George W. Bush is mulling ways to help the automakers after Congress failed to reach a deal on US$14 billion in loans for GM and Chrysler. Ford has applied for a US$9 billion line of credit but says it has enough cash to make it through next year.
“It’s clear that the automakers are in a very fragile financial condition and they’re taking steps to deal with it,” White house press secretary Dana Perino said in a statement. “We’re aware of their financial situation and are considering possible policy options to provide assistance in an appropriate way.”
Chrysler spokesman Dave Elshoff said four plants would be temporarily closed beyond Jan. 19: two plants in Toledo, Ohio, and one each in Ontario and Detroit.
At Ford, a company spokeswoman said on Wednesday it would shut down 10 of its North American assembly plants for an extra week in January, also because of lower US sales.
Spokeswoman Angie Kozleski said the normal two-week holiday shutdown would be extended to Jan. 12 at all operating assembly plants except those in Claycomo, Missouri, near Kansas City, and the Dearborn, Michigan, truck plant.
Ford will also extend the shutdown at some engine, transmission and parts stamping plants, or temporarily shut portions of them to match cuts at the assembly plants, she said.
GM said last week it would temporarily close 20 factories across North America and make sweeping cuts to its vehicle production. Many of those plants will be shut down for all of next month. On Wednesday, GM said it was delaying construction of a new engine factory in Flint, Michigan.
Executives at GM and Chrysler have restarted talks to combine the two ailing automakers, the Wall Street Journal reported yesterday.
The Journal, citing people familiar with the discussions, said the talks had been rekindled after Cerberus Capital Management LP, the majority owner of Chrysler, signaled it was willing to part with some of its stake in the automaker.
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