As they try to weather the current economic storm, automakers around the globe are cutting costs, raising prices, and laying off workers to maintain profitability. In particular the Detroit Three are struggling to stay afloat, with GM and Ford shutting down plants to avoid creating a glut of unsold vehicles. And now -- fresh off rumors that it filed for bankruptcy -- Chrysler is joining its Detroit colleagues and will cut a shift at one manufacturing plant, while closing down its St. Louis South facility entirely.
St. Louis South currently employs 1500 workers and builds the Chrysler Town and Country, Dodge Grand Caravan, and Chrysler Grand Voyager for the European market. The consumer shift away from gas-guzzling vehicles, though primarily affecting SUVs, is hurting the automaker's signature minivans, too -- sales of the Town and Country are down 13.4 percent for the year, while the Grand Caravan has dropped by a full 34.6 percent. Because of this, Chrysler will idle St. Louis South indefinitely starting October 31st, and exclusively rely on its Windsor, Ontario plant for minivan production. In addition to Chrysler's family haulers, Windsor also builds the joint-venture Volkswagen Routan. As for whether the facility may reopen when sales improve, Chrysler co-president Tom LaSorda isn't optimistic, saying he sees "no intent to rerun this plant" and that "it will likely be fully closed."
The automaker also plans to trim production at its St. Louis North truck manufacturing plant by cutting its second shift and laying off 900 workers, starting on September 1st. St. Louis North currently builds the Dodge Ram pickup, and though the company has an all-new Ram with a more fuel-efficient engine lineup due soon, the nationwide decline in truck sales makes running a second shift unnecessary. Co-president Jim Press blames both moves on a decline in consumer confidence caused by "oil prices and the credit crunch." Glenn Kage Jr., a UAW financial secretary, disagrees. According to Cage, Chrysler is shutting down factories in Missouri instead of Ontario because minivans produced in Windsor cost $1000 less per vehicle to make, due to Canada's national health care system. Though recent negotiations with the UAW have helped ease automakers' health care burden, many American factories are still at a competitive disadvantage.
Though privately-owned Chrysler hasn't disclosed its financial situation, recently CEO Bob Nardelli admitted that the company is experiencing "the lowest sales level in 16 years" and will have to make adjustments. Though for the 2009 model year Chrysler is introducing new features like in-car internet access, the automaker is also being forced to raise prices across its lineup. If Chrysler's fiscal health doesn't improve, further production and job cuts could become necessary down the line.
Source: Automotive News (Subscription required)