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Plastech bankruptcy could shut all of Chrysler

Boy this is ugly.

From automotive News:

Plastech bankruptcy could shut all of Chrysler
Automaker wants to reclaim tooling

Philip Nussel
and Robert Sherefkin
Automotive News
February 4, 2008 - 11:47 am ET
UPDATED: 2/3/08 2:46 p.m. EST


DETROIT -- The Chapter 11 filing by supplier Plastech Engineered Products Inc. threatens to halt Chrysler LLC's production at its 14 assembly plants, the automaker says in court papers filed here.

Citing a parts shortage, Chrysler today said it temporarily closed four assembly plants and canceled a shift at a fifth plant after Plastech filed for Chapter 11 protection.

The parts disruption soon could halt Chrysler's production of 2.3 million vehicles a year, according to documents filed by Chrysler in U.S. Bankruptcy Court over the weekend.

Chrysler terminated its contracts with Plastech early Friday, Feb. 1. Plastech, a major U.S. supplier of plastic trim, filed for Chapter 11 protection that evening.

" They have stopped shipping parts," Chrysler spokesman Kevin Frazier said this morning.

Plastech supplies Chrysler about 500 types of trim, such as door panels, floor consoles and engine covers. Losing those parts " will in turn halt the production of (Chrysler's) entire corporate fleet of vehicles, idle at least 14 plants and lay off associated workers for an undetermined amount of time," Chrysler said in the court documents.

The automaker is asking U.S. Bankruptcy Judge Phillip Shefferly to let Chrysler take immediate possession of its tooling in Plastech's plants. Plastech opposes the motion, saying its business assets are protected by bankruptcy law.

Chrysler tried to collect its tools Friday, prompting the Chapter 11 petition.
A hearing is set for 9:30 a.m. Tuesday, Feb. 5, in Bankruptcy Court here.
No other Plastech customers have reported production problems because of the supplier's Chapter 11 filing. General Motors, which relies on Plastech for several key parts, said there has been no impact on production today, spokeswoman Deborah Silverman said in an e-mail.

Plastech also supplies Ford Motor Co. and Johnson Controls Inc., among other customers.

" We are working with Plastech to ensure there is an adequate supply of parts to our facilities," Ford spokesman Todd Nissen said in an e-mail today. " We have not experienced any production losses, but we are continuing to closely monitor the situation."

Affected Chrysler plants are:
-- Belvidere assembly plant; Belvidere, Ill. The plant makes the Dodge Caliber and Jeep Compass and Patriot.

-- Newark assembly plant, Newark, Del. The plant makes the Chrysler Aspen and Dodge Durango.

-- Sterling Heights assembly plant, Sterling Heights, Mich. The plant makes the Chrysler Sebring and Dodge Avenger.

-- Toledo North assembly plant, Toledo, Ohio. The plant makes the Dodge Nitro and Jeep Liberty.

-- The Toledo Supplier Park, also in Toledo, will cut the second shift today, Chrysler said. The plant makes the Jeep Wrangler.

Chrysler's Frazier declined to say why Plastech would be unable to ship parts. Court protection allows a company to operate its business while reorganizing its finances.

" We're still working cooperatively toward a mutual solution" with Plastech, Frazier told Automotive News.

Plastech officials could not be reached for comment.

Before filing for bankruptcy, Plastech tried to obtain a $200 million bailout package aimed at stabilizing the suburban Detroit supplier.
Terminating contracts and moving tools is a time-consuming and expensive step for an automaker. Such moves are taken when there is concern that a supplier's financial difficulties will interrupt the flow of parts to assembly lines.
Plastech owns more than 35 plants in North America and generated $1.4 billion in sales last year. The company employs 7,700 people and is about 70 percent unionized, according to court documents.
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