Chrysler halts manufacturing, reopens merger talks with GM

Chrysler, the smallest of the Detroit Big Three automakers, and General Motors, the biggest, say they are on verge of imminent collapse unless the government throws them a financial lifeline.Â

 

Chrysler said it was halting its manufacturing for at least a month, beginning Friday, in response to a credit crisis and ongoing debate on a government rescue for the sector.

 

"As a result of the financial crisis, the automotive market remains depressed due to the continued lack of consumer credit for potential buyers," the privately held firm said in a statement.

 

"Last week several automakers announced significant downward adjustments in production for the first quarter of 2009, and to make sure our inventory remains aligned with market demand, Chrysler will also extend the holiday shutdown already in place."

 

As a result it said that "all Chrysler manufacturing operations will be idled at the end of the shift Friday, December 19, and impacted employees will not return to work any sooner than Monday, January 19, 2009."

 

Chrysler said it had informed the United Auto Workers union, employees and suppliers about the actions.

 

The company said that dealers have indicated "many willing buyers for Chrysler, Jeep and Dodge vehicles" but have been unable to close the deals, due to lack of financing.

 

The company, which is owned by private equity firm Cerberus, did not disclose the number of employees affected. A company fact sheet said Chrysler employed 63,480 as of September.

 

Chrysler has 14 assembly plants, 10 powertrain plants, four stamping operations and five manufacturing affiliations outside of North America.

 

BAILOUT

News of the temporary shutdown came a day after the White House warned that the U.S. auto industry would have to make "concessions" to win a government bailout.

 

The Big Three -- GM, Ford and Chrysler -- have warned that without a package of loans, millions of jobs could be lost, which they say would send ripple effects through the nation’s already faltering economy.

 

The automakers have been seeking a bridge loan of some $14 billion to help weather the crisis but it remained unclear if the U.S. government will come up with the funds.

 

GM said last week it was idling 30 percent of its North American production "in response to rapidly deteriorating market conditions."

 

U.S. auto sales dropped 37 percent in November amid talk of a potential bankruptcy at General Motors or Chrysler should Washington fail to deliver a massive bailout package.

 

RESTARTED MERGER TALKS

Executives at General Motors Corp. and Chrysler LLC have restarted talks to combine the two ailing automakers, The Wall Street Journal reported Thursday.

 

The Journal, citing people familiar with the discussions, said the talks have been rekindled after Cerberus Capital Management LP, the majority owner of Chrysler, signaled it is willing to part with some of its stake in the automaker.

 

Messages seeking comment from auto company spokesmen were not immediately returned.

 

GM and Chrysler had been in talks earlier this year to combine in order to survive, but financing emerged as an obstacle.