DaimlerChrysler Plans 1-Week Factory Closures
In another sign of the pressures facing the Chrysler arm of DaimlerChrysler, the company said Friday that it will idle seven factories in the U.S. and Canada for one week starting Monday to cut vehicle inventories.
The move comes as sales of Chrysler, Dodge and Jeep vehicles have been erratic in recent months, with several models posting large declines. About 20,000 workers will be idled but will receive 95% of their regular pay under union contracts.
DaimlerChrysler made the announcement a day after the German-U.S. auto maker reported a 79% drop in third-quarter operating profit, primarily because of a $512-million loss at its Chrysler unit. Profit at the U.S. unit, based in Auburn Hills, Mich., was down because of lower sales and higher incentives to move out 2000 inventory.
The plants to be idled include a truck factory in Warren, Mich.; St. Louis Assembly North in Fenton, Mo.; and the Jeep Wrangler plant in Toledo, Ohio. Plants will also close in Newark, N.J., and Belvidere, Ill., along with operations in Bramalea and Windsor, Ontario, Canada.
The move will affect production of Dodge Ram and Dakota pickups, Dodge Ram vans, the Dodge Durango and Jeep Wrangler sport-utility vehicles, the Neon subcompact and the company’s large LH sedans--the Dodge Intrepid and the Chrysler Concorde, LHS and 300M.
Although U.S. auto sales for the year through September were up 5%, DaimlerChrysler’s car sales excluding Mercedes-Benz were down 11% and its truck sales were flat.
Separately Friday, DaimlerChrysler said it will recall 1.4 million minivans built between 1996 and 2000 to fix problems with a fuel rail seal that could leak--but a replacement part won’t be available until March.
The voluntary recall covers Dodge Caravan and Grand Caravan, Plymouth Voyager and Grand Voyager and Chrysler Town & Country minivans with 3.3- and 3.8-liter V-6 engines.
DaimlerChrysler shares lost 54 cents to close at $43.19 on the New York Stock Exchange. The stock, which has fallen 45% this year, hit a fresh 52-week low during the day of $42.35.
