Chrysler news

Chrysler LLC announced today that it temporarily closed four of its assembly plants and may close other production operations due to a contract dispute with parts maker Plastech Engineered Products Inc. The plants Chrysler chose to idle are those in Sterling Heights, Mich., Newark, N.J., Toledo, Ohio, and Belvidere, Ill. The decision was taken as the car manufacturer is seeking an emergency court hearing to access machines from Plastech plants that exclusively make Chrysler parts.

A few days ago, Plastech, one of the country’s largest minority-owned auto suppliers, filed for bankruptcy after Chrysler pulled the contracts. Chrysler is about to launch an advertising campaign that would emphasize the interior improvements in twelve of its cars. Among them are the Chrysler Aspen and Chrysler 300. This month’s orders are already exceeding the production of those cars as dealers boosted their demand after hearing about the improvements.

The company issued a statement with the occasion of these changes and said in it that the delayed production volume will be rescheduled in the near futures. We are monitoring the situation closely and will adjust inventory mix accordingly to ensure our operations resume efficiently as quickly as possible, said the written statement.

According to Aaron Bragman, analyst at Global Insight, it is rather atypical for a car manufacturer to cut contracts because backup suppliers need to be in place or else the company runs the risk of shutting down production lines, which is costly. This could prove to be a huge problem as Chrysler tries to return profitability. Idle plants are only costing money, they aren’t producing cars and trucks, he said.