Saturday, May 02, 2009

Chrysler to Close 8 Plants -
But NOT Reduce the Workforce?

Chrysler's bankruptcy plan outlines that it plans to close 8 plants in the United States before the end of 2010. Two of those plants are already idle, St. Louis South and Newark, Delaware.

The other plants are

Sterling Heights, MI. (Sebring & Avenger)
Detroit Axle
Conner Avenue Assembly (home of the Viper)
St. Louis North (Ram)
Kenosha, WI (engines)
Twinsburg OH (stamping)

Altogether these plants employ about 5,000 workers. By my reckoning, the closed plants account for half or so of Chrysler's (USA-based) final assembly capacity. Two assembly plants in Canada and two assembly plants in Mexico are not set for closure.

Despite the efforts of the PTFOA to ferret the bullshit out of Chrysler plans, there seems to still be quite a bit of fantasy in Chrysler's bankruptcy plan.

Don't be surprised if this plan gets more scrutiny in the bankruptcy court than Chrysler and The PTFOA are anticipating. You can't ignore the April sales figures, with car sales down more than 60% compared to last year. For example, the Sebring & the Avenger only sold 16,875 units combined through April. That's a third of a year. That puts them on a yearly pace of 50,000 units, or roughly a fourth of a two shift modern assembly plant capacity. They only reached that level with Employee Pricing Plus Plus. In other words, each car is apparently being sold at a loss. Why wait until 2010 to put these cars out of their misery? There's not much difference between having a gaping hole in the middle of your lineup and having a couple cardboard cutouts trying to hide the gaping hole in your lineup.

Chrysler is maintaining that almost no more jobs will be lost with this diminished plant capacity. I find this hard to believe. Even if it's technically true, the workers won't be relying much on Chrysler for their daily bread.. The workers making cars that aren't selling will be surviving on unemployment and sub-pay for 8 months a year at the current rate of sales. The pay coming from Chrysler will basically be coming from Uncle Sam's bankruptcy financing. When their plants close in a year or so, there will be about 5,000 people that will have to find work in another town, mostly another state, making Chrysler's new generation of cars (mostly Fiats) that will have no track record of reliability or dependability, and that's assuming the jobs don't go to Mexico and Canada.

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