Close of business Friday will be the start of a monthlong closure of 30 U.S. plants. Company cites 'continued lack of consumer credit.'
NEW YORK (CNNMoney.com) -- Chrysler LLC announced late Wednesday that it is stopping all vehicle production in the United States for at least a month.
All 30 of the carmaker's plants will close after the last shift on Friday, and employees will not be asked to return to work before Jan. 19.
Chrysler blamed the "continued lack of consumer credit for the American car buyer" for the slow-down in sales that forced the move.
The company ordinarily shuts down operations between Dec. 24 and Jan. 5. This closure would add roughly two weeks to that shutdown.
Chrysler would not say how many fewer vehicles would be produced because of this shutdown. A total of 46,000 employees will be affected. They will be paid during the time off through a combination of state unemployment benefits and Chrysler contributions, but they will not receive the full amount of their working pay, a Chrysler spokesman said.
"Chrysler dealers confirmed to the company at a recent meeting at its headquarters, that they have many willing buyers for Chrysler, Jeep and Dodge vehicles but are unable to close the deals, due to lack of financing," the carmaker said in an announcement. "The dealers have stated that they have lost an estimated 20% to 25% of their volume because of this credit situation."
Auto sales have been hit hard by tight credit and the struggling economy. Overall auto sales in the United States were down 37% last month compared with November 2007. Chrysler's situation was especially bad. Its sales dropped 47%.
Chrysler's financing arm, Chrysler Financial, has tightened lending terms for buyers and earlier this year, it announced it would no longer offer leases.
Chrysler, Ford Motor Co. (F, Fortune 500) and General Motors (GM, Fortune 500) have approached Congress for aid to help them get through the current financial crisis. A congressional effort to establish a stopgap, $14 billion loan program to help Chrysler and General Motors at least until next month collapsed in Congress last week.
The Bush administration has said it is working on a possible plan to throw the companies a lifeline using money from the $700 billion bailout approved by Congress in October, the Troubled Asset Relief Program or TARP.
"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 Wednesday. "We're aware of their financial situation and are considering possible policy options to provide assistance in an appropriate way. As we've said, a disorderly collapse of the auto industry should be avoided."
General Motors recently announced it was idling 30% of its North American manufacturing capacity during the first quarter of 2009 in response to deteriorating market conditions. That move will take 250,000 vehicles out of production.
"The speed and severity of the U.S. auto market's decline has been unprecedented in recent weeks as consumers reel from the collapse of the financial markets and the resulting lack of credit for vehicle financing," GM said in a Dec. 12 announcement, citing a 41% drop in November sales.
Both GMAC and Chrysler Financial are trying to receive federal assistance under the TARP program. GMAC is affiliated with General Motors, which owns 49% of the finance company. The other 51% of GMAC is owned by a consortium of investors led by Cerberus, which owns Chrysler and Chrysler Financial.
http://money.cnn.com/2008/12/17/auto...ion=2008121717 (http://money.cnn.com/2008/12/17/auto...ion=2008121717)
Carpocalypse 2008
Actually, I just proposed this plan to some coworkers yesterday. GM / Ford / Chrysler take a month off - unpaid vacation if you will. This would
A - save a ton of money short term
B - reduce bloated inventories
C - give them 30 days to clean / repair / retool / revamp / close / consolidate / etc their plants
mitt
Not only is Chrysler shutting down production, but they're re-opening merger talks with GM.
From the Wall Street Journal (http://online.wsj.com/article/SB122957294608617461.html?mod=testMod):
"GM and Chrysler LLC have reopened merger talks, as Chrysler owner Cerberus Capital Management LP has signaled its willingness to give away part of its ownership in the auto maker, say people familiar with the discussions.
The renewal of the talks could be a way for Cerberus to show Washington -- which is weighing a $14 billion rescue package for the auto industry -- that it wants to cooperate in restructuring the industry, say people familiar with the buyout firm's thinking. And it could offer the firm a way to protect its stakes in two distressed auto-finance companies, GMAC LLC and Chrysler Financial, which are crucial to the survival of the Detroit auto makers."
Ok, do I buy GM or Chrysler stock?
If you want to buy some, it'd have to be GM stock.
Chrysler is now "Chrysler LLC" and is privately held by Cerberus. No shares of Chrysler LLC trade publicly on the exchanges.
Quote from: mitt on December 17, 2008, 06:42:03 PM
Actually, I just proposed this plan to some coworkers yesterday. GM / Ford / Chrysler take a month off - unpaid vacation if you will. This would
A - save a ton of money short term
B - reduce bloated inventories
C - give them 30 days to clean / repair / retool / revamp / close / consolidate / etc their plants
mitt
too bad the workers can't take a month off from paying bill and feeding the kids eh?
Quote from: CapnCrunch on December 18, 2008, 01:28:07 AM
too bad the workers can't take a month off from paying bill and feeding the kids eh?
They will be paid during the time off through a combination of state unemployment benefits and Chrysler contributions, but they will not receive the full amount of their working pay, a Chrysler spokesman said.
When I worked at Ford and people were laid off they received 90-95% of their regular pay between unemployment and union contributions. It may suck to be laid off for a month but if I could get a month off and still collect 90% of my salary I'd be ok with that. Please correct me if this percentage has changed.
Quote from: CapnCrunch on December 18, 2008, 01:28:07 AM
too bad the workers can't take a month off from paying bill and feeding the kids eh?
If they're living paycheck to paycheck and don't have 3-6 month's worth of income in the bank set aside for emergencies then that's their own damn fault. Doesn't matter who they work for and what they're paid either as having an emergency fund is EVERYONE's responsibility.
Quote from: Drjones on December 18, 2008, 05:56:59 AM
If they're living paycheck to paycheck and don't have 3-6 month's worth of income in the bank set aside for emergencies then that's their own damn fault. Doesn't matter who they work for and what they're paid either as having an emergency fund is EVERYONE's responsibility.
There you go with all this crazy financial responsibility and maturity talk again. Sheesh, yer so un-American it hurts. ;D ;)
Quote from: CapnCrunch on December 18, 2008, 01:28:07 AM
too bad the workers can't take a month off from paying bill and feeding the kids eh?
2 of the 4 weeks is a planned shutdown, and they're getting 85% of their compensation for the whole time they're laid off.
A (basically) paid month off? Woo hoo!
Adam
Quote from: DrDesmosedici on December 18, 2008, 07:58:21 AM
2 of the 4 weeks is a planned shutdown, and they're getting 85% of their compensation for the whole time they're laid off.
A (basically) paid month off? Woo hoo!
Adam
When I was an hourly worker for FoMoCo, temporary layoffs = TIME TO PARTY! [laugh]
This was back in the early '90's - I remember getting one of our layoff notices when we came into work the evening shift. All of the outgoing day-shift workers were standing at the pay phones in the lobby, talking to travel agents and booking trips to Vegas. [laugh] [beer]
Ah, good times... [bacon]
Quote from: MikeZ on December 18, 2008, 05:00:27 AM
They will be paid during the time off through a combination of state unemployment benefits and Chrysler contributions, but they will not receive the full amount of their working pay, a Chrysler spokesman said.
When I worked at Ford and people were laid off they received 90-95% of their regular pay between unemployment and union contributions. It may suck to be laid off for a month but if I could get a month off and still collect 90% of my salary I'd be ok with that. Please correct me if this percentage has changed.
Your percentages are correct; they collect State and federal unemployment, and then the automakers pay the differnce between those benefits and what 95% of their normal pay would be.
This is actually just a publicity stunt. The auto makers normally shut down for 3 weeks during this time of the year anyway for plant maintenance. So really, they are only closing for an additional week beyond what they normally close for. They are announcing this routine shutdown in an attempt to scare the American public and Congress/White House into getting behind a bailout. Its just more of the typical strong-arm tactics the automakers have always applied in a variety of situations to get what they want.
Quote from: CapnCrunch on December 18, 2008, 01:28:07 AM
too bad the workers can't take a month off from paying bill and feeding the kids eh?
Well, in 6 months, if nothing is changed, they might get full time off and then a month wouldn't seem so bad would it?
And actually, you can take a month off paying bills if you really need to.
mitt
Yeah, a lot of manufactoring plants shut down this time of year for atleast two weeks.
They'll probably be getting paid holidays for most of it...
Quote from: mitt on December 17, 2008, 06:42:03 PM
Actually, I just proposed this plan to some coworkers yesterday. GM / Ford / Chrysler take a month off - unpaid vacation if you will. This would
A - save a ton of money short term
B - reduce bloated inventories
C - give them 30 days to clean / repair / retool / revamp / close / consolidate / etc their plants
mitt
it will also make it "the new guy's" problem
Too late;
NYT
Quote
President Bush announced $13.4 billion in emergency loans to
prevent the collapse of General Motors and Chrysler, and
another $4 billion available for the hobbled automakers in
February, with the entire bailout conditioned on the
companies undertaking sweeping reorganization plans to show
that they can return to profitability quickly.
I am personally tired of looking at GM's and Chrysler's on the road anyway.
They should figure out how to make those 25k Diesel soot filters for less money, and sell them for 7 or 8 K to all the California Operators. They could sell those by the thousands.