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Chrysler reached an interim deal with Plastech extending
through 15 February 2008, which restores shipments and
allows assembly operations to resume today at previously
idled facilities. The estimated volume impact due to supply
disruptions amounted to nearly 5,000 units over the past
36 hours, which can be readily recovered if warranted.
Plastech, one of the largest minority-owned automotive
suppliers and producers of injection-molded components,
filed for bankruptcy protection on Friday, 1 February 2008
after Chrysler cancelled its contracts. As a result, Chrysler
idled operations at five of its vehicle assembly plants.
General Motors and Ford continue to receive shipments from
the supplier and their assembly plants remain in operation
without interruption. Production of large injection molded
parts such as door trim and front and rear fascias requires
a high degree of precision, especially within the painting
process. This requires additional time for replication if
production content is resourced with a different supplier
at another facility.
Chrysler: Unlike other manufacturers that rely on Plastech
for components, Chrysler had taken a more deliberate
and far-reaching position with respect to ongoing vehicle
production, component supply and tooling with the
company. These circumstances are highly unusual and
suggest that a broader strategy is being pursued. Due to
this situation, Chrysler had idled several of its factories,
namely Belvidere, Newark, Sterling Heights, Toledo North
and Toledo Supplier Park. The temporary closings came at
a time when plant products, with the exception of the Jeep
Wrangler at Toledo Supplier Park, are facing weak demand.
By late Monday, part shortages at Windsor and Brampton
facilities in Canada prompted output to be cut by nearly half
for the first shift. Belvidere and Toledo North plants are in
the process of reducing their operations by a shift each. The
net volume impact is modest as this interruption effectively
pulls ahead planned downtime at some plants.
Key platforms supplied: C/D, HB and KJ/KK.
General Motors: At this time, vehicle production has not
been disrupted as Plastech currently supplies a number
of high volume programs. Plastech supplies content to
a number of newer entries that are an important part
of General Motors’ new product offensive, including the
LAMBDA architecture. General Motors’ production guidance
reflects a cautious outlook in the first half of 2008 and the
company is expected to continue to maintain its focus on
improving transaction prices while taking steps to reduce
fleet volume.
Key platforms supplied: EPSILON, GMT355/700, GMT360,
LAMBDA and MS2000.
Ford: Plastech supplies a smaller number of programs
at Ford than at Chrysler and General Motors. Plastech is
sourced to supply a range of newer vehicles that emanate
from the P2/D3 platform and are at or near launch, including
the Ford Flex and Lincoln MKS. Content is also supplied
to high volume crossovers, including the Ford Edge and
Lincoln MKX sourced in Oakville, Ontario. At this point,
production has not been disrupted as Ford works with
Plastech to maintain supplies for uninterrupted production
of its vehicles.
Key platforms supplied: CD1-3 and P2/D3.
Summary: As previously
stated, the “Cerberus Effect”
w o u l d b e f e l t q u i c k l y a s
Chrysler moves to address
the fundamental disconnect
between over-production and
disappointing sales results
across its product range.
Following the very sudden
plant and product actions
late in 2007, these aggressive
steps further highlight the
dynamic nature of private
equity ownership.
For questions, please contact
Mike Jackson, Director,
North American Vehicle Forecasts,
at mikejackson@csmauto.com
or + 1 248 465 2833
Joe Langley, Senior Analyst,
North American Vehicle Forecasts,
at joelangley@csmauto.com
or + 1 248 465 2832