Chrysler To Shut Plants For A Month

Ailing automaker Chrysler is shutting down all its manufacturing operations for at least a month. All three Detroit automakers routinely close for a couple of weeks around Christmas, but Chrysler says it is extending the shutdown because there isn't enough demand for vehicles.

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MELISSA BLOCK, host:

From NPR News, this is All Things Considered. I'm Melissa Block.

MICHELE NORRIS, host:

And I'm Michele Norris. Citing a lack of sales, Chrysler says it is shutting down all of its manufacturing operations for at least a month. All three Detroit automakers routinely close for a couple of weeks around Christmas, but Chrysler says it's extending the shutdown because there just isn't enough demand for vehicles. NPR's Frank Langfitt covers the auto industry, and he's here with me now. Frank, should this move by Chrysler raise alarm bells? Is this the beginning of the end?

FRANK LANGFITT: No, certainly not yet. I mean, as you just mentioned, they do this for two weeks every year around this time. Normally, it's from Christmas Eve to around January 5th. What they're now saying is workers won't come back any sooner than the 19th of January. And, of course, it could go longer. That all depends on how sales and orders go. But this is a sign of the trouble that we've been reporting now for weeks. The auto market out there has been devastated. You know, if you take last year, there were 17 million cars and trucks bought in the United States. Next year, it looks to be about 11 and a half million.

NORRIS: So, what's at the heart of the problem with car sales in Chrysler's view?

LANGFITT: Well, what they're saying is this is really - the problem here is consumer credit and lack of it. Chrysler says they're getting customers into the showroom, but they're losing 20-25 percent because those customers just can't get loans. I've been spending a lot of time with dealers in the last few weeks, and they see other factors as well. I mean, some people are just pulling back. They're worried about the future. They don't want to spend a lot of money on a car right now.

Even though there are extraordinary deals out there - some of the dealers are doing everything they can to move product - some people have gone to dealers and say they're waiting for prices to actually fall even further. And there were a couple at a Chevy dealership recently that I talked to in Delaware who said they were actually looking to see if GM went bankrupt - thought they could even get a better deal if that happened. So there are some very tough shoppers out there.

NORRIS: Chrysler is planning to temporarily shut down all of its manufacturing operations. So, Frank, how many plants, how many workers are we talking about?

LANGFITT: Well, you're talking about 30 plants and certainly more than 30,000 workers. And, of course, this isn't just Chrysler. Ford is shutting down 10 plants for an extra week, and GM's talking about cutting production in the next three months of next year, about 250,000 cars and trucks. They'll be shutting down many of their plants well into February.

I was talking yesterday with a guy I know who runs Local 22, United Auto Workers local in Detroit, and I was going to come out and visit him in January. And he was saying, you know, no one's going to be around. We're all going to be off work. Most people will be at home or traveling or looking for short-term jobs.

NORRIS: Once they get into this, is it possible that the one-month shutdown might be extended?

LANGFITT: Absolutely. I think that right now we're in uncharted territory in terms of the car market here, and people are very concerned with what they read in the papers every day, what they hear on our air. And whether that market is going to pick up early in January and February, we just don't know. So if it doesn't look strong, the factories could stay shut for longer.

NORRIS: GM and Chrysler are asking the federal government for $14 billion in loans to keep afloat into next year. The White House says that it plans to help. When will we actually see a package?

LANGFITT: Well, you know, today President Bush said relatively soon. Sources that I'm talking to say anywhere from Friday up until Christmas Eve. One concern the government has is there's only $15 billion left in that Wall Street bailout fund, and the White House has some concerns that they, you know, wouldn't have enough money left in case there are bigger financial problems along the way with banks, you know. We won't see a new Congress until early January, and a new president doesn't take over until the 20th.

NORRIS: Thank you, Frank.

LANGFITT: Happy to do it, Michele.

NORRIS: That was NPR's Frank Langfitt.

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