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Following
widespread media speculation Chrysler has today
confirmed the identity of the eight manufacturing plants
that won't be transferred to the new entity during this
month's bankruptcy proceedings and will be scheduled for
closure. The biggest Chrysler plant to be discarded will be the
Sterling Heights Assembly Plant in the greater Detroit
area which currently produces the Dodge Avenger
and Chrysler Sebring sedan and convertible. Other
facilities to go will include Kenosha Engine, Twinsburg
Stamping, Connor Avenue and St. Louis North.
We understand that there has been
some confusion over the past few days regarding the
status of certain Chrysler facilities in connection with
its restructuring plan, as was disclosed as part of the
company’s Chapter 11 filing last week - read an official
statement issued by Chrysler in Auburn Hills - We recognize that
in the context of consummating the Chrysler-Fiat
alliance and last week’s filing, we did not communicate
in the fashion we could have with the affected
communities. We are committed to working with every
Chrysler community throughout this restructuring
process.
On Feb. 17, 2009, Chrysler LLC submitted its Viability
Plan to the U.S. Treasury and the President’s Auto Task
Force. As part of this plan, a number of restructuring
actions were designed to address significant declines in
the Seasonally Adjusted Annual Rate (SAAR) of auto sales
– from 15.6 million in January 2008 to 9.8 million in
January 2009 – and position Chrysler for future success.
Chrysler’s stand-alone plan contemplated several plant
closings based on continued volume deterioration trends
as well as a plan that contemplated a global alliance
with Fiat that enhanced its stand-alone plan, and
included significant concessions from all stakeholders.
The specific plant actions were not made public because
it would have been presumptuous to assume that the plan
was going to be approved, and inappropriate to
communicate prior to thorough discussion with the United
Auto Workers union.
On March 30, 2009, the U.S. Treasury and the President’s
Auto Task Force rejected Chrysler’s stand-alone
Viability Plan. However, the Task Force agreed that
Chrysler could submit a plan that would be evaluated
with a decision made by April 30, provided that it
include a global alliance with Fiat and more aggressive
sacrifices by all stakeholders.
Between March 30 and April 29, 2009, Chrysler diligently
pursued this path. Fortunately Chrysler was able to
secure an alliance with Fiat. The capacity reductions in
the new alliance framework mirrored the Feb. 17 plan,
though some of the timing was changed due to continued
shift in volume trends and consumer demand.
As a result, on April 30, Chrysler LLC announced that it
reached a definitive agreement to establish a global
strategic alliance with Fiat to form a vibrant new
company. This alliance will save Chrysler, more than
50,000 jobs worldwide, including the preservation of
more than 30,000 U.S. and 9,000 Canadian jobs, along
with thousands of employees at dealers and suppliers.
This far outweighs the alternative of liquidation.
In order to effectuate this plan, Chrysler filed
voluntary petitions under Chapter 11 of the U.S.
Bankruptcy Code. Chrysler also filed a motion under
Section 363 of the Bankruptcy Code, requesting the swift
approval by the court of the agreement with Fiat and the
sale of Chrysler’s principal assets to the new company.
The substantial majority of Chrysler’s assets,
operations, plants and people will be transferred to the
new company, while assets and liabilities that are not
consistent with Chrysler’s business plan will remain
with the old company for disposition. Under the
supervision of the court, and with the support of the
U.S. Treasury and the President’s Auto Task Force, the
new company will quickly emerge from bankruptcy as a
restructured and financially healthy organisation.
The plants currently scheduled for closing are as
follows:
-
Sterling Heights Assembly Plant: A severe decline in the
market has resulted in reduction of volumes and thus
made operation of this plant not possible. The plant is
expected to continue operation through December 2010.
-
Kenosha Engine: Unprecedented reduction in volume and
demand for products has resulted in the decision to idle
the plant in December 2010.
-
Detroit Axle: All required work will be moved to a new
facility that is being developed in nearby Marysville,
Mich. The plant will be idled in December 2010.
-
Twinsburg Stamping: Due to deteriorating volumes and in
order to optimize capacity, existing volume will be
transferred to Warren Stamping and Sterling Stamping
plants effective March 2010.
-
Conner Avenue Assembly Plant: The facility and vehicle
platform has been for sale since 2008. The site is
scheduled to idle December 2009.
-
St. Louis North Assembly Plant: Due to volume reduction
in the truck segment, capacity will be optimised by
moving RamBox production to Warren Truck Assembly Plant
effective third quarter of 2009.
-
Newark Assembly Plant (closed December 2008).
-
St. Louis South Assembly Plant (closed October 2008).
While most manufacturing operations have been
temporarily idled in order to reduce dealer inventory
and as part of the restructuring process, this idling
was not the result of the bankruptcy filing, and we
expect that most workers will be back on the job
following the bankruptcy proceedings and the formation
of the new company.
It is expected that virtually all employees associated
with these facilities will be offered employment with
the new company. The Jefferson North Assembly Plant is
scheduled to add a second shift which represents 1,200
jobs coinciding with the introduction of the all-new
Jeep Grand Cherokee. While the company continues to
address difficult market conditions, this alliance will
ultimately provide Chrysler customers and dealers with a
broader and more competitive line-up of fuel-efficient
vehicles and technology.
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