Chrysler, Plastech may have interim deal

Bankruptcy

Negotiators for Chrysler LLC and a troubled parts supplier were trying to end a dispute that shut down or canceled a shift at five Chrysler plants and threatened to idle all 14 of the automaker's assembly facilities.

Plastech Engineered Products Inc., which supplies Chrysler with about 500 plastic interior, exterior and powertrain components for nearly all of its vehicles, filed for Chapter 11 bankruptcy protection on Friday after the automaker told the supplier it was seeking other sources for the parts.

The dispute cut the flow of parts from the Dearborn-based Plastech to Chrysler, and the company on Monday was forced to shut down four factories and cut a shift at a fifth.

Chrysler sued Plastech in U.S. Bankruptcy Court in Detroit, and the both sides were in court Monday but were unable to resolve the matter, a person briefed on the negotiations said. Talks went into the evening and recessed until Tuesday morning, when further court action was scheduled, said the person, who requested anonymity because the talks are confidential.

Chrysler is seeking an immediate resumption of parts production as well as the tools to make the parts, which it owns. Without the tools, Chrysler said in its lawsuit that it eventually will have to cease production of vehicles systemwide.

The automaker terminated its contracts with Plastech on Friday.

Plastech's contracts with the automaker were worth about $200 million, Plastech spokesman Kelvin Scott said. Plastech does about $1.3 billion in total business.

"We are continuing to supply parts to our other customers, including Ford and GM," he said.

One industry analyst said the production slowdown may be short because Chrysler should have little trouble finding new companies to replace Plastech.

Faced with stiff competition and a shrinking market, many suppliers are willing to take on work if it means getting contracts, said Craig Fitzgerald, a partner in Plante & Moran's Strategy and Global Services Group.

In its lawsuit filed Friday, Chrysler claimed Plastech no longer can meet its production demands.

On Monday Chrysler temporarily closed the four assembly plants and shut down one shift at another, affecting about 10,500 workers.

Plants closed are in Sterling Heights, Mich.; Newark, Del.; Toledo, Ohio; and Belvidere, Ill., while the second shift at Toledo Supplier Park in Toledo was dismissed, the company said.

Of the vehicles made at the affected factories, the Dodge Durango sport utility vehicle had the lowest supply in January, at 46 days, according to Wards AutoInfoBank. The largest supply is the Jeep Wrangler, at 117 days.

Although Chrysler has an inventory of vehicles made by the plants, it will not benefit from any plant closures, said Aaron Bragman, an auto industry analyst for the consulting company Global Insight.

"When a plant is idle, you're not making any money. You've got people standing around, so it's just a cost," he said.

Auto companies want enough inventory to have a buffer and don't want it to become depleted, Bragman said. Chrysler has reduced its inventory substantially since it became bloated last year, he said.

Even if Chrysler lays off workers, they would still get most of their pay under their contract with the United Auto Workers.

Overall, the company had 413,874 vehicles in its inventory last month, a 75-day supply, according to Ward's.

The shutdowns are having a ripple effect as auto parts maker Dana Corp. canceled Monday night's second-shift at its modules plant in Toledo. About 150 people work at the plant, which supplies drivetrain parts for Chrysler's Toledo Jeep plant.

Employees at the Sterling Heights stamping plant were sent home early Friday night and after four hours of work Monday, union steward Russell Phillips said.

"We have no extra stock," said Phillips, who adds that Chrysler works on a "just-in-time" policy for parts delivery.

"Most of (the workers) are saying 'this is what they get for not wanting to keep stock in the house,'" Phillips said.

Chrysler employees will be notified of return-to-work schedules from plant officials or through local media, the automaker said.

Plastech has 36 facilities and 7,600 employees in the United States and Canada.

Engine covers, grill panels, moldings, metal stampings, door panels, floor consoles and safety restraint system components are some of the parts Plastech supplies to Chrysler, Ford Motor Co., General Motors Corp. and Toyota Motor Corp., according to the company's Web site.

Ford was still getting parts from Plastech and was unaffected by the dispute, Ford President of the Americas Mark Fields told reporters Monday night.

Chrysler's work shutdown should last no more than a week or two, Fitzgerald said.

"I think they will not have any problems filling the void," he said. "There is a lot of excess capacity. Chrysler would do everything it can to get up and running."

Related listings

  • Senate's Dodd to offer bankruptcy reform bill

    Senate's Dodd to offer bankruptcy reform bill

    Bankruptcy 11/28/2007

    A senior lawmaker said on Wednesday that he planned to introduce a bankruptcy reform bill that would give new relief to individuals overwhelmed by mortgage, medical and student loan debt.Sen. Christopher Dodd, a presidential candidate and chairman of...

  • Levitz Auction Set For Wednesday

    Levitz Auction Set For Wednesday

    Bankruptcy 11/26/2007

    New York-based Levitz Furniture, which was forced into bankruptcy by a credit crunch earlier this month, could have new owners as soon as Thursday after Manhattan’s bankruptcy court approved an auction that is set for Wednesday at noon. The winning b...

  • Delphi Asks to Delay Ch 11 Hearing

    Delphi Asks to Delay Ch 11 Hearing

    Bankruptcy 11/05/2007

    Auto-parts supplier Delphi Corp. has asked a U.S. bankruptcy court to delay one of its reorganization hearings so it can respond to objections raised by creditors and investors, the company said Monday.The Troy, Mich.-based company, which is still st...

Illinois Work Injury Lawyers – Krol, Bongiorno & Given, LTD.

Accidents in the workplace are often caused by unsafe work conditions arising from ignoring safety rules, overlooking maintenance or other negligence of those in management. While we are one of the largest firms in Illinois dedicated solely to the representation of injured workers, we pride ourselves on the personal, one-on-one approach we deliver to each client.

Work accidents can cause serious injuries and sometimes permanent damage. Some extremely serious work injuries can permanently hinder a person’s ability to get around and continue their daily duties. Factors that affect one’s quality of life such as place of work, relationships with friends and family, and social standing can all be taken away quickly by a work injury. Although, you may not be able to recover all of your losses, you may be entitled to compensation as a result of your work injury. Krol, Bongiorno & Given, LTD. provides informed advocacy in all kinds of workers’ compensation claims, including:

• Injuries to the back and neck, including severe spinal cord injuries
• Serious head injuries
• Heart problems resulting from workplace activities
• Injuries to the knees, elbows, shoulders and other joints
• Injuries caused by repetitive movements

For Illinois Workers’ Compensation claims, you will ALWAYS cheat yourself if you do not hire an experienced attorney. When you hire Krol, Bongiorno & Given, Ltd, you will have someone to guide you through the process, and when it is time to settle, we will add value to your case IN EXCESS of our fee. In the last few years, employers and insurance carriers have sought to advance the argument that when you settle a case without an attorney, your already low settlement should be further reduced by 20% so that you do not get a “windfall.” Representing yourself in Illinois is a lose-lose proposition.

Business News

New York & New Jersey Family Law Matters We represent our clients in all types of proceedings that include termination of parental rights. >> read