Chrysler Corporation, in a move dictated by sales that are dropping off a cliff, has announced a one month shutdown of all 30 of its plants, extending the normal two week shutdown by two weeks. From the Washington Post:
Struggling U.S. automakers are launching a round of severe cutbacks as they wait for a government rescue, with Chrysler saying yesterday it will idle all 30 of its U.S. factories for one month.
Chrysler’s plants will furlough 46,000 workers beginning Friday, as a planned two-week holiday shutdown is extended to a month and possibly longer. The company, which has told Congress it needed $7 billion to survive the month, also told dealers that it may suspend financing for new cars in a bid to conserve cash.
“No one will return to work any earlier than Jan. 19,” Chrysler spokesperson Shawn Morgan said. “I don’t want to get into speculating about what may happen after that. . . . We’re going to continue to monitor the situation.”
The Wall Street Journal is reporting that the GM-Chrysler merger talks have restarted, with Cerberus looking to give away parts of its equity in Chrysler as part of that deal. And the downturn has hit the foreign automakers hard as well.
Honda has cut its annual forecast and said it will trim global production by more than 300,000 vehicles. Toyota said earlier this week that it will halt construction of a plant to build the Prius in Mississippi as sales of the fuel-efficient gas-electric hybrids have sagged along with gas prices and the economy.
“This is not just the Big Three who are in trouble,” Virag said. “This is the entire U.S. auto industry, including domestic and transplants.”
If a deal is not cut with G.M or a finance package offered by the federal government I do not believe those Chrysler plants will open again. The month long furlough will impact 46,000 workers, who will receive unemployment benefits during that time.
As far as the potential for federal money Treasury Secretary Hank Paulson is heading the government team from the Bush Administration that is dealing with the Big Three. I believe that the government will indeed come up with a finance package, and that as part of that package Chrysler will disappear, becoming a part of G.M. As the time grows short I believe you will see an announcement very shortly.
Bill Manzi.com 
going, going ….
I’ll only note two things:
1) Chrysler is about the last thing GM needs. The only marque of value is Jeep, and even that is questionable.
2) At first, I thought southern Republicans might wake up when NASCAR becomes a Toyota spec series. Now, maybe even Toyota pulls out. Talk about cutting off your nose to spite your face.
Wow. I could have had a Hemi.
-FM
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Even dedicated wingnut Pat Buchanan gets it … maybe there is yet hope, though I don’t know how long to hold my breath.
Couldn’t have said it better myself.
http://news.yahoo.com/s/uc/20081216/cm_uc_crpbux/op_338388
“In today’s world, America faces nationalistic trade rivals who manipulate currencies, employ nontariff barriers, subsidize their manufacturers, rebate value-added taxes on exports to us and impose value-added taxes on imports from us, all to capture our markets and kill our great companies. And we have a Republican Party blissfully ignorant that we live in a world of us or them. It doesn’t even know who “us” is.”
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And if anyone wants to spend time in some formerly great places in Detroit …
http://jalopnik.com/5110995/the-ruins-of-detroit-industry-five-former-factories#viewcomments
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Fred,
I have a hard time believing that Chrysler would simply shutter their operation and walk away. There are billions in assets that can be rescued. There are investors whose rights have to be considered. Would the UAW throw in the towel without making some sort of compromise to keep their jobs?
The same holds for GM.
Ford has stabilized itself and seems to be able to carry on with a simple line of credit. Ford has a new line of cars to be added to their line to replace non sellers.
Now, just to remind you that since 2006 the Democrats hold the majority in congress. While president Bush’s polls sit at a measly 22%, the Democrat dominated congress stands at a mediocre 9%.
Have the Democrats proposed relief legislation to eliminate the problems you enumerated above?
I believe we have been poorly lead by all of the political class here in Massachusetts and in Washington.
Jules
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Jules:
I am thankful this morning that at least there is a temporary measure in place to give them breathing room.
Chrysler may not want to shutter the operation, but in the end, as I’ve said before, they need to sell and finance cars, and right now, they’ve got the weakest product line. If a partnership with Daimler (who builds some of the very best cars in the world) couldn’t be made to work, what chance do you think they have alone? What compromise do you think the UAW can make before it isn’t worthwhile to management to simply shut down the machines, unbolt them from the floor, and ship them to China, like so many other manufacturing industries have done? Cerberus won’t put any more of their own funds into it. That should tell us all we need to know about their commitment to the business.
GM I think will come out, a bit smaller than it is now. There is still latent talent, a world wide brand (Chinese, for some reason, love Buicks), and some future technology in the mill. Now, if only their management comes around … because at the core of this is a management problem. They are not building the right vehicles now, and they are going to need an infusion of new talent at the highest levels to get their culture to adjust.
Ford, as I’ve said, is the strongest of the three (my guess is soon to be two), they began to evolve to just in time manufacturing a few years ago, have very strong European brands (which, after all these years, we may finally see here, can’t wait).
You know I can’t buy the “since 2006” strawman argument, because even though there is a slim Democratic majority, the Republicans still vote as a block. Coupled with a President who found his veto pen, there is little that the Democrats could have done to start anything Republicans are determined to stop (see “auto-bailout”). It will take a veto-proof majority before you see this trend break, unless Republicans see the light. That to me is why Congress has such low approval ratings: they can’t get anything of any substantive nature done (that doesn’t involve tax cuts, anyway).
It’s a shame the Republicans have taken this tack – I’m sure we’ll see over the next two years what the future of the party will be for the next generation. Even Dick Cheney sees this. But, you won’t catch me thinking the current Democrats are god’s gift to us. They have simply degenerated less than the Republicans have.
Have the Democrats proposed relief legislation? Not to my knowledge. To be more protectionist would require renegotiations of NAFTA and WTO treaties, which do not recognize labor or environmental issues. I don’t think Mr. Reagan would be able to save Harley Davidson as he symbolically did in the 80’s.
Yes, we’ve been poorly led. But, to me, it started with the supply side (voodoo) economics of Mr. Reagan, followed by the free trade at any cost crowd that came afterwards, giving us NAFTA and WTO. We’ve moved more industry offshore, grown the separation between rich and poor in our own country, while killing the middle class. It’s a very long term problem, one which I fear our short attention span and gotcha politics may not be able to cope with.
Obama has at least paid some lip service to understanding this: let’s see what happens. I know what side you’re on – I just hope you’re dead wrong. Don’t take it personally.
Someday, we’ll get into that conversation more fully. But, I’m away on holiday soon.
Have a happy one, if I don’t post again until after the new year ..
-FM
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But before I go, I’ll leave you with one piece of humor from conservative comedian P. J. O’Rourke I saw in yesterday’s paper ….
“The Democrats are the party that says government will make you smarter, taller, richer, and remove the crabgrass on your lawn. The Republicans are the party that says government doesn’t work and then they get elected and prove it.”
Enjoy the holiday, all!
-FM
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