Effective Friday, all 30 Chrysler N.A. manufacturing operations will go idle for one month.

http://www.marketwatch.com/news/stor...873264CACA4%7D

 

Just watched it on CNN.

Chrysler is shutting down for 30 days.

Question is will Chrysler lines reopen. Without Fed loans, the question is will Chrysler have enough money to reopen after 30 days.

Ford is closing 10 plants temporarily.

Suppliers, who are already skating on thin ice are already at risk of going under while Chrysler is closed.

If they do, other assembly plants at Ford and GM will shut down their lines due to a lack of parts.

If GM shuts down, the question is will they be able to reopen before they get a loan package by the next congress and administration.

This is a grim situation folks.

Of course, the guys with their head in the sand will disagree... but then you can't explain things to a rock and expect the rock to be smarter.

 

It's being also said on the news that Chrysler dealers could sell 25% more vehicles if the people who wanted to buy could get credit.

That seems to be the hangup on closing deals.

 

Something we still don't know is if Chrysler has enough people to keep the place running.

EDIT: And with regards to financing - yes, all car companies could continue selling some more cars if banks were handing out free money.

 

It is interesting that Ford is closing plants, temporarily, to control inventories.............. while GM and Chrysler are doing it to save money. The lowering of inventory is just a bonus for them.

Suppliers will not be poor yet. The manufacturers work on NET 45-NET 90 terms, so they still have to pay for parts that they have received already. Whether GM and Chrysler are doing that, I don't know.

Frankly, Chrysler could probably shut down for 6 months, and not run into much of an inventory shortage.

 

I thought I remembered hearing, at least for GM, that they used to be on NET 30 terms, but due to their current problems, they pushed that back to NET 60 or 90 terms.

Eric,

What do you mean will they have enough people?

 

A better question is: would what does Cerberus do if the loans don't come through?

They obviously have the cash to keep Chrysler afloat, they have the cash to do SOMETHING once a direction is chosen but WILL they? Would they just opt to bankrupt and sell Chrysler instead of keeping it open?

 

It would be interesting to see what the government would do if Chrysler didn't get the money and then Ceberus kept them open with money they had all along.

 

Rumors are floating out of CTC that the voluntary layoffs resulted in cuts far, far deeper than the goal of 25% RIF.

 

If that is the case...hopefully with so many people looking for jobs, they can pick up the extra production positions. Management and engineering might take a little longer to fill, but there are probably plenty unemployed engineers right now. It might take a little while to get brought up to speed, but with the way car sales are going, that won't hurt anything

 

Just saw this article myself...I'm not really that surprised. I work for an auto supplier, it's common for us to basically take all of December off. This year we have 22 consecutive days off...so a little less than a full 30 days but this is fairly normal for us.

 

If there was ever a time for a auto factory to shut down for awhile, now is most certainly the time. Between down time for christmas and the amount of utilities that could be saved by being closed down in the winter, it would be the time to save the most money and do the least permanent damage.

But will Chrysler be able to restart in a month?

Will GM follow a similar path, which could do far more damage than chrysler shutting down and Ford closing up nearly a dozen plants for a month or so?

That's the million dollar question.

I see and agree with your points.

I recall there was a rush of people accepting buyouts at the last moment, and Chrysler hasn't replaced those that left by attrition in some time, but I didn't know their drain was that bad.

A rare instance of a drawdown and buyout being too successful.

 

Interestingly enough, according to a recruiter that we work with, the unemployment rate for engineers in southeast Michigan is extremely low right now - a couple percent. Now, that was a month or so ago and maybe things have gotten worse, but it's still extremely difficult to find good people.

If indeed Chrysler made cuts in certain "niche" areas like powertrain and crashworthiness, those people are likely on their way to new jobs, and Chrysler will have an extremely difficult time finding replacements. And that assumes that there are any HR folks left to do the hiring, and any accountants left to pay suppliers and workers, and any buyers left to purchase parts, and...

You're assuming that this wasn't the desired end result

 

I know 2 that are out of work in the greater Detroit area, and a third that gave up and moved back to Arizona to pursue a career change with a house he cant sell in Michigan.