Canadian Idle: Two Chrysler plants shut down over supplier dispute
Chrysler has been playing hardball with the Canadian government in an effort to secure up to $3 billion in loans, as company Vice Chairman Tom Lasorda recently threatened to leave Canada if it didn't receive the necessary loons. One supplier with only 60 employees is giving the Pentastar a sneak peak of what life will be like without its Canadian plants.
Chrysler was forced to shut down two Ontario plants as the facilities ran out of diecast aluminum engine and transmission mounts. The Brampton plant, which produces the Chrysler 300, Dodge Challenger and Charger closed on Thursday and the Windsor minivan facility closed on Wednesday. The facilities will remain idle until the Pentastar can get the parts flowing again. Chrysler released a statement saying that if the parts shortage continues, other North American facilities may be affected.
The supplier in question, Trans Cast, recently purchased the engine and transmission mounts facility and demanded more money for the parts. Bloomberg is reporting that Chrysler has gotten a court order to get the tooling equipment from the supplier so they could produce the parts themselves. Once Chrysler receives the tooling, it intends to produce the mounts at a plant in Etobicoke, Ontario.
What isn't clear so far is whether Chrysler was behind on payments with Trans Cast. But since Trans Cast purchased the plant out of foreclosure very recently, it's unlikely that Chrysler would be in the hole with the new owners. What isn't in question is Chrysler's prodigious cash crunch. Chrysler has just recently received a $250 million Canadian dollar loan from the Canadian government just to keep plants open. The Auburn Hills, MI automaker has also asked for $6 billion in financial aid from the U.S. government, in addition to the $2-3 billion requested from the Canadians.
[Sources: New York Times; Bloomberg]
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Reader Comments (Page 1 of 1)
Luis 10:35AM (4/03/2009)
The shut down of Chrysler is going to be an interesting soap opera to watch over the next couple of months.
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Avinash machado 10:35AM (4/03/2009)
Of the big three,Chrysler seems to be the one most likely to collapse.
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Tang 10:38AM (4/03/2009)
"...as company Vice Chairman Tom Lasorda recently threatened to leave Canada if it didn't receive the necessary loons."
We got plenty of loons here in Minnesota!
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BoxerFanatic 10:38AM (4/03/2009)
Another thing that Challenger and Camaro can share... part supplier problems.
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TheChork 10:46AM (4/03/2009)
haha that's a great headline! Canadian Idle...
and by the way, its LOONIES. Thats right, we have a coin called a loonie...
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jamie 11:45AM (4/03/2009)
Friday, April 3, 2009
Court gives GM, Chrysler equipment
Automakers can get tooling for parts from Canadian supplier whose closure shut plants
Alisa Priddle / The Detroit News
Chrysler LLC and General Motors Corp. secured court orders to remove their equipment from a Canadian parts supplier that went out of business, forcing the shutdown of two Chrysler plants in Canada.
Production of Chrysler 300, Dodge Charger and Challenger sedans in Brampton stopped Thursday and minivan plant production in Windsor has been shut down since Wednesday due to a shortage of brackets for engines and transmissions, said Chrysler spokesman Max Gates. He said the company was trying to find the parts at other plants to send to the Canadian assembly plants to get them back into production. He didn't expect any other plants to be affected.
No GM assembly plants are expected to be disrupted, said GM spokesman Dan Flores.
Sources close to both automakers said Transcast Precision Inc. told them it was prepared to shut down or liquidate unless it received significantly higher prices for its parts.
Responding to that, Flores said, "GM will not tolerate the coercive behavior exhibited by Transcast."
The supplier could not be reached for comment.
The dispute underscores the difficulties automakers face, including temporary production shutdowns, as a result of problems facing smaller suppliers.
The Ontario Superior Court of Justice issued the court orders, which allow both companies to reclaim their equipment and machinery.
Gates said the tooling will be moved to Chrysler's casting plant in Etobicoke, Ont. The hope is the move can be done in less than a week.
Flores said GM is "in the process of securing the tooling and re-sourcing the work to other suppliers."
The supplier is the former Solus Manufacturing Ltd., part of the H.E. Vannater Group of automotive suppliers. When Vannater ran into financial troubles, it was purchased by Transcast.
Bringing the work in-house is a "Band-Aid solution," said Jim Gillette, director of financial services for CSM Worldwide in Grand Rapids.
The strategy provides an instant fix, but automakers are hurt in the long-run because suppliers typically do much of the research and development for the automakers.
There are no guarantees the tooling will provide the same quality or output after it is moved, Gillette said.
Meanwhile, negotiations between Chrysler and the CAW have lost some of their intensity on concessions required by the Canadian and Ontario governments as a condition of government loans pending the resolution of efforts by Chrysler to finalize an alliance with Fiat SpA.
The partnership with Fiat is a condition of the U.S. government in return for loans and must be complete by the end of the month. Success could yield an additional $6 billion in requested loans. Failure could result in Chrysler's liquidation.
http://www.detnews.com/article/20090403/AUTO01/904030343/1148/auto01/Court+gives+GM++Chrysler+equipment
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Tricky dicky 12:08PM (4/03/2009)
leftlanenews is reporting that an agreement has been struck to get them tooling.
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gurry 12:15PM (4/03/2009)
So they secure funding from the Taxpayers of Canada to keep up with payroll, now the workers are laid-off... can we get our money back?
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HPJim 12:18PM (4/03/2009)
Build mine and ship it without mounts, I'll build my own!
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Sean 12:40PM (4/03/2009)
Is it wrong of me to want Chrysler to die so I can afford a Charger?
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Tony 6:27PM (4/03/2009)
If Chrysler goes bankrupt can you afford the tooling to keep your Charger on the road. If you buy one, buy the one with all the options and the rarest paint, keep the build sheet, store for 25 years and pray we still sell gas to run it across the Barrett Jackson ramp.