The Squeeze Is On 

Posted: 9:03 pm Wednesday, December 17th, 2008

By Jamie Dupree

I was wondering how long it would take U.S. automakers to start taking some drastic moves to save their companies, after talking for weeks about how bad their financial outlook was.

We may finally be seeing some of those near desperate moves.

Chrysler – which said it needed $7 billion this month to avoid bankruptcy – is now going to close down every one of its North American manufacturing plants for at least a month.

In all, 30 plants in the US, Canada and Mexico will shut down on Friday, with no plans to re-open those lines until at least January 19.

Think about that.  They are shutting down for a month.  That means they aren’t worried about running short on cars and trucks during that time frame, because not many people are buying them.

(For those of you wondering, the workers at those plants will still get most of their pay and benefits under the current union contract, even though they won’t be at work.  But that’s another story and another argument for a different day.)

As one headline I saw yesterday said, “Is Chrysler Shutting Down For a Month, or Forever?”

At Ford, which is the best shape of the Big Three, there will evidently be a three week down period, up from the usual two week holiday slowdown.

Ford plans to reduce its production of vehicles in the first quarter of 2009 by almost 40 percent, another move that shows the dramatic drop in consumer demand.

General Motors meanwhile is stopping work on a new plant in Michigan that was going to produce the engines for the Chevy Volt, the plug-in/electric/hybrid that was supposedly part of its future.

Let’s just say with oil dropping more every day, and gasoline getting cheaper, not many people are swarming car dealers looking for small, fuel efficient cars.

GM last week made clear that many of the company’s plants in the US will be idle for much of January as well.

So what does this mean for the auto bailout being considered by the Bush Administration?  Something tells me the White House isn’t faking when it talks about “concessions” from all sides, meaning the carmakers, the unions and those who hold the debt of Chrysler and GM.

In the end, it may take more than just a one-month “holiday” for workers to right the ship at those two companies.


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