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The Honolulu Advertiser
Posted on: Thursday, December 18, 2008

Auto plants to shut down

By Mike Ramsey and Greg Bensinger
Bloomberg News Service

Hawaii news photo - The Honolulu Advertiser

The assembly line robots at the Warren Truck Plant in Warren, Mich., will be shut down at the end of tomorrow night's shift as Chrysler idles all 30 of its plants for a month to conserve cash.

ASSOCIATED PRESS FILE PHOTO | September 2008

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Chrysler LLC, awaiting a federal rescue as its cash dwindles, will shut all 30 of its plants for at least a month starting Dec. 19 as unsold cars and trucks pile up at showrooms.

Ford Motor Co. said it will idle most of its North American assembly plants for the first week of January, while General Motors Corp. said a new factory making engines for the Chevrolet Volt electric car is being delayed to conserve cash.

The cutbacks showed how far automakers are going to save money and prune output in a year in which industrywide U.S. sales are poised to fall to their lowest levels since 1991. GM and Chrysler say they may run out of operating funds in just weeks without emergency U.S. aid.

"Vehicle manufacturers are going to closely align their demand with supply," said Michael Robinet, an analyst at CSM Worldwide Inc. in Northville, Michigan. "You are finding that these inventory correction actions are not only taking place at Chrysler but with all the vehicle manufacturers."

White House spokeswoman Dana Perino said in an e-mail that "there's nothing new on the auto front" as officials reviewed plans for a GM and Chrysler bailout. Yesterday had been the earliest that the administration would finish a rescue proposal, a government official said, speaking on condition of anonymity.

GM, the biggest U.S. automaker, and No. 3 Chrysler have asked for a combined $14 billion in federal aid in order to survive until March 31. U.S. sales at Detroit-based GM fell 22 percent through November, while Chrysler's tumbled 28 percent, the most among major automakers.

Members of the United Auto Workers union on temporary layoff are eligible to receive 95 percent of their usual take- home pay, from a combination of unemployment-insurance benefits and a supplement from automakers. Labor costs make up about 10 percent of the cost of producing a vehicle.

Assembly operations at Chrysler won't resume until Jan. 19 at the earliest, the automaker said yesterday in a statement, without specifying the size of the cut in output.

Chrysler said its two factories in Toledo, Ohio, that make the Jeep Liberty, Dodge Nitro and Jeep Wrangler won't reopen until Jan. 26. A minivan plant in Windsor, Ontario, and the Dodge Viper operations in Detroit will be shut until Feb. 2, said Shawn Morgan, a spokeswoman for the Auburn Hills, Michigan- based automaker.

The idling of the Ford factories is part of a previously announced plan to reduce first-quarter North American production by 38 percent, to 430,000 cars and trucks, spokeswoman Angie Kozleski said in an interview. Of 15 assembly plants in the region, 9 are closing temporarily; 3 are unaffected; and 3 more are being retooled.

Models affected by Ford's production halt include the Taurus and Town Car sedans, Mustang sports car, Explorer sport- utility vehicle, Ranger small pickup truck and Focus compact.

Ford, whose sales are down 19 percent this year, has said it isn't seeking emergency loans.

GM indefinitely suspended work on the $370 million factory in Flint, Michigan, that will make 4-cylinder engines for the Volt and the Chevrolet Cruze small car in 2010.

Spokeswoman Lynda Messina said the plant is still scheduled to produce the engines in 2010, when the Volt is supposed to debut. The Volt is being designed to run 40 miles (64 kilometers) on battery power before needing a recharge from the onboard gasoline motor.