DaimlerChrysler to idle some plants in next 3 weeks

By JUSTIN HYDE

Associated Press

DETROIT — The troubled Chrysler arm of DaimlerChrysler AG says it will idle a number of plants in the next three weeks to cut inventories of unsold vehicles.

The company said Friday it would idle two plants next week, one plant the week of Dec. 11 and five plants the week of Dec. 18. The first week shutdowns will affect 5,500 workers, while the second will affect 2,000 and the third will affect 19,200.

Chrysler also said its sales for November were down 5 percent, with sales of its key minivans down 16 percent.

"The industry is dealing with a highly competitive, saturated marketplace today," Chrysler President Dieter Zetsche said. "The combination of a softening market and an excess of inventory requires immediate action."

The moves comes as the company struggles to handle a slowdown in the U.S. auto market. This week Chrysler idled three plants and 13,600 workers in Detroit, Toledo, Ohio, and Ontario, Canada to cut inventories. In November, it closed seven plants for a week — a move that surprised DaimlerChrysler Chairman Juergen Schrempp and eventually led to the ouster of Chrysler President James Holden.

Next week, the Newark, Del., plant and the St. Louis North truck plant in Fenton, Mo., will be idled. The following week, the Pillette Road plant in Windsor, Ontario plant will be shut down; the week of Dec. 18, plants in Belvidere, Ill.; Detroit; Fenton, Mo.; Toledo, Ohio; and Brampton, Ontario, will not operate.

Chrysler did not say how the shutdown would affect its other parts-making plants, such as metal stamping and engine assembly, in the United States and Canada.

Workers will get 95 percent of their regular pay under contracts with the United Auto Workers.

Jamie Jameson, Chrysler’s vice president for sales and marketing operations, said the shutdowns will cut about 50,000 vehicles from Chrysler’s inventories. He said the company was aiming to have a 70 to 75 days’ supply of vehicles — 470,000 to 480,000 — by the end of December, down from about 80 days’ supply at the end of October.

The industry standard for inventory is usually 60 days’ supply, but General Motors Corp. and Ford Motor Co. also have been holding more than that in recent months. GM also has idled plants to reduce inventories, while Ford’s inventories have been affected by parts shortages.

Jameson said the 16 percent drop in minivan sales appeared to be fallout from the company’s struggles with its such sales earlier this year. The company’s minivans account for about 40 percent of the vehicles it sells each year, and make a significant share of its profits as well.

Chrysler has admitted it overestimated demand for older 2000 model year minivans, which forced it to use incentives of up to $4,000 to clear out the old models to make room for the new 2001 versions.

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