Chrysler’s Suppliers Balk, Shutting 3 Plants

Source: Detroit Free Press

Chrysler’s bankruptcy filing triggered an immediate and unplanned shutdown at plants through metro Detroit as suppliers stopped shipping parts out of fear they won’t be paid.

Workers were sent home from Warren Truck, Warren Stamping and Sterling Stamping plants this afternoon. The company plans to temporarily close all its factories beginning next Monday and continuing through the bankruptcy process, but the immediate shutdowns illustrate how easily what has been billed as a “surgical” bankruptcy can quickly become messy.

“Suppliers have decided not to ship product,” said Tom LaSorda, Chrysler vice chairman who announced today he is retiring. “It’s not in every facility. It was going to happen on Monday anyway. Hopefully suppliers will continue to supply us.”

While the company planned to halt production to pare inventories, some of the plant idlings likely will be permanent closings.

“There will be further capacity rationalization (plant closings),” LaSorda said. “The plants have been identified and we’ll have to work through that.”

Read more: http://www.freep.com/article/20090430/BUSINESS01/90430058/1014/Chrysler+s+filing+triggers+shutdown

:shrug:

And typical of this industry.

When you are a parts supplier like that, your company has already put forth the money for raw materials, labor, transportation of product, etc., and then your payment is tied up in bankruptcy proceedings, you could go bust in the meanwhile.

Sound business practice to not extend credit to a company that may go into receivership, or reorganization. COD all the way.

This article says at least $3 billion could be used for paying suppliers.

we're giving $8 billion to a foreign company. The wingnuts are sure going to spin that.

Not Chrysler management or Obama. If I were a supplier I would demand payment before shipment or no dice.

In particular, a court may allow a debtor to reaffirm unsecured debt to the extent it is "necessary for the effective reorganization of the company". :hi:

Sounds like somebody wants some panic.

The plants were going to be closed Monday anyway.

I don't drive or own a car, but am curious about what it will take to make the brand desirable again.

If the government is backing the warranty, I'd certainly buy one.

I had some friends who had them in the Seventies, but they were really lousy cars. I'm in the NYC media market, and I don't recall seeing any Fiat advertising since I moved here two years ago.

Frankly, this feels like maybe Chrysler just merged with Yugo.

...but the cars they're making now are *much* better than the godawful crap they sold back in the 70s. They've undergone a renaissance of sorts in the past decade.

surely the biggest reason they went for this deal was to be able to sell product in the huge North American market.

The only one I'm even remotely interested in having now (and I drive an MG instead) is a Fiat Spyder, but I'm quite happy with my MG, thankyouverymuch. The rest of the Fiats were boxy, crappy bastards.

If I recall correctly, they all leaked/burned oil like a sonuvabitch.

Repairs aside.

You don't see any Renaults around either anymore.

Comparing Fiat to Yugo is just ignorant.

Can't wait for next April's Consumer Reports auto issue.

I have a '92 Chrysler that runs very well, thank you. But somehow, I don't think my purchases of parts are going to keep the company afloat. Not when they have gotten accustomed to a business model where people have to buy a new car every other year. It could be worse for them; the U.S. could become like Cuba, where a 50 year old car is a "late model".

Reagan must be laughing his ass off in hell.

The rats are jumping ship.

<SNIP>

that is a huge step in the right direction if he can do the same with Chrysler. the old saying...a new broom sweeps clean...applies to this guy.

out of our country.