AFSCME 3357-HOF'S BLOG

Chrysler and Plastech Reach Interim Agreement
Shutdown of all Chrysler Plants avoided - for now

Breaking news from the Automotive News website, Chrysler and supplier, PLastech have reached an interim agreement for Plastech to ship parts to Chrysler through February 15.

Today's Wall Street Journal included more information on the problem with supplier Plastech that shut down four Chrysler plants and threatened to shut down more. In fact, according to the WSJ, every Chrysler plant could ultimately be affected.

Apparently, Plastech has been on the verge of bankruptcy for some time. Last year it negotiated an assistance agreement with its customers that included a substantial cash payment to Plastech. That wasn't enough, so when Plastech went to Chrysler last week with hat in hand, begging for more assistance, Chrysler said enough is enough, and demanded that Plastech return the Chrysler-owned molds and tooling used by Plastech. Instead of returning the equipment, Plastech filed bankruptcy.

Until the interim deal was struck today, Chrysler was scheduled to go to bankruptcy court tomorrow to get the molds returned on an emergency basis. Presumably that court date is off the table. I would guess that neither Chrysler nor Plastech was as prepared as they would prefer to be for a court proceeding upon which the future of each company could depend.

So, 10 days from now we could be back where we are now, facing a big shutdown of all Chrysler facilities. Given Chrysler's already shakey foundation, and given Cerberus's limited desire and ability to sink new money into the company, it wouldn't take a long shut down to give Cerberus the cover to shut down operations and sell off the company piecemeal. Memo to Plastech: This ain't General Motors you're dealing with. Don't f*** with Cerberus.