DETROIT — Chrysler said on Monday that it would close one of its two minivan plants and reduce output of a long-awaited new pickup truck in response to a steep slump in demand for large vehicles.þþBoth plants affected by the announcement are in Fenton, Mo., 20 miles southwest of St. Louis. About 2,400 of the company’s 3,500 hourly jobs in Fenton will be eliminated within four months, Chrysler said.þþThomas W. LaSorda, one of Chrysler’s two presidents and vice chairmen, said in a conference call that the minivan plant, which opened in 1959 and was closed for several years in the early 1990s, would be idled “indefinitely,” meaning there was no expectation that it would reopen.þþ“We see no need for the capacity in the future,” Mr. LaSorda said.þþAt the same time, Chrysler is operating some plants on overtime to build more of the fuel-efficient small cars whose popularity has soared after rising gasoline prices. It is shortening summer shutdowns at some car plants to one week from two, and extending the annual shutdowns at some truck plants to keep inventories from building further.þþ“It’s important that we act now to align ourselves with the current market reality,” Mr. LaSorda said.þþBut Mr. LaSorda insisted that Chrysler’s owner, the private equity firm Cerberus Capital Management, was not considering more drastic actions like breaking up the automaker. He called growing speculation about that possibility “absolute hogwash.”þþThe quarter has been dismal for the industry. General Motors and the Ford Motor Company also recently announced production cuts and plant closures.þþSales reports that the automakers will release Tuesday are expected to show that June was the worst month in as many as 15 years, with sales down about 17 percent from a year ago, according to estimates by Edmunds.com.þþChrysler, which makes a higher proportion of trucks than other major automakers, is thought to have fared the worst, but all three Detroit companies are projected to report drops of at least 25 percent. Through May, Chrysler’s sales were down 20 percent.þþ“The very difficult environment for auto sales continues to take a much heavier toll on the Big Three, which are being hit disproportionately by the consumer’s dramatic shift away from traditional trucks toward more fuel-efficient vehicles,” Brian Johnson, an analyst with Lehman Brothers, wrote in a note to clients.þþThe Detroit car companies have significantly increased discounts on pickups and some other models, but with limited success. Ford recently said it would delay introducing its full-size pickup, the F-series, for two months while dealers try to sell their stocks of the current version.þþChrysler said Monday that it would begin selling the 2009 Dodge Ram pickup on schedule in September, but that it would be assembled by only one shift of workers at the St. Louis North plant, rather than two. (Plants in Warren, Mich., and Saltillo, Mexico, also build the Ram.)þþBy Oct. 31, Chrysler plans to shut down the adjacent St. Louis South plant. Chrysler will continue building the Chrysler Town and Country and Dodge Caravan in Windsor, Ontario; that plant is operating on three shifts.þþ“We continue to remain committed to and bullish about the Dodge Ram and the minivans,” Mr. LaSorda said. “But we have to better align the volume to our inventory.”þþLast fall, U.A.W. members who work at the Fenton plants overwhelmingly voted against a four-year labor contract with Chrysler, arguing that it contained no job security provisions or guarantees that their plants would remain open. The Fenton workers were among the first to vote on the deal at Chrysler and began a wave of dissent that threatened ratification of the contract, though it ultimately received narrow approval.þþThe cuts affect about 9 percent of the jobs in Fenton, said the city’s mayor, Dennis Hancock, who called the news disappointing but “understandable, given the extreme slowdown in the economy.”þþStill, Mr. Hancock says he wishes that Chrysler had not selected both plants in Fenton as it grapples with the changing market. “There’s going to be a ripple effect,” he said. “No doubt about it.”þþ
Source: NY Times
