/ 18 December 2008

Chrysler to idle plants as pressure builds for aid

Chrysler said on Wednesday that it would halt factory operations for at least a month, putting new pressure on the Bush administration to quickly help cash-strapped automakers.

The shutdown beginning on Friday will idle plants in the United States, Canada and Mexico that produce vehicles for its Chrysler, Jeep and Dodge brands.

More than 30 000 unionised workers at US factories will receive nearly full wages and benefits during the shutdown, which Chrysler said was prompted by ongoing financial stress worsened by the global credit crunch and dwindling sales.

Chrysler sales plunged 47% in November and were down almost 28% for the first 11 months of 2008.

The dramatic and unexpected move to save money underscored the urgency of pleas by Chrysler and General Motors (GM) for an immediate bailout they say is their best hope for near-term survival.

GM has said it would cut first-quarter production by 60% compared with the same period a year earlier. And on Wednesday, the company said it had suspended construction at an engine plant in Michigan central to its long-term plans to build more fuel-efficient vehicles.

The White House had no comment on the Chrysler development but leading Senate Democrats who have pressed for assistance said the decision to stop work even temporarily demonstrated that intervention cannot wait any longer.

”This administration must act now,” Senator Debbie Stabenow, a Michigan Democrat, said in a statement. ”I once again call upon the president to use his authority and provide a bridge-loan to our automakers.”

Democratic lawmakers and industry sources have said that any emergency assistance would likely cover GM and privately held Chrysler and total up to $14-billion.

Ford, the healthiest of the three, is not seeking immediate capital but has asked the government for a line of credit to be tapped only if its finances worsen more than expected in 2009. — Reuters