World financial news

Chrysler LLC and General Motors Corp. could announce plant closures when they submit viability plans to the U.S. Treasury next week, an auto industry analyst said today.

Chrysler, GM and Ford — which isn’t receiving federal loans but still is burdened with the economic downturn — could each close two assembly plants and have enough capacity to meet demand, said Haig Stoddard, an industry analyst for IHS Global Insight. Among the plants at risk for closure between now and 2012: the St. Louis North Plant, where the Dodge Ram is made, Stoddard said Monday.

The Detroit Free Press and Wall Street Journal reported this weekend that plant shutdowns are expected to be part of the restructuring. Both media outlets quoted Stoddard and mentioned the Chrysler’s Fenton plant, where more than 1,000 people work.

Chrysler spokeswoman Shawn Morgan declined to comment Monday.
In 2008, Chrysler produced nearly 1.9 million vehicles, according to Automotive News. Production is expected to drop about 31 percent to 1.3 million vehicles this year, and Stoddard said 10 assembly plants could meet that amount. Chrysler has 12 assembly plants in operation.

Meanwhile, the Wall Street Journal cited anonymous sources that said Chrysler would close at least one assembly plant.

Since Chrysler cut one shift of the Fenton pickup assembly in September, analysts have considered the plant at risk of closure saving account payday loan. Last month, Stoddard told the Post-Dispatch it was possible that Chrysler would close some plants this year and the Fenton plant would be a probable choice.

One production shift in manufacturing is considered inefficient and unprofitable.

"Typically you want at least 80 percent capacity in most assembly plants to keep them profitable," Stoddard said.

The St. Louis North plant is operating at 43 percent of its capacity, he added.

Chrysler could meet demand by consolidating Dodge Ram production to plants in Warren, Mich., and Saltillo, Mexico, that also make the pickup, analysts have said.

The Fenton plant isn’t the only vulnerable Missouri plant. Stoddard said Ford might close the F-150 pickup assembly plant in Claycomo, a suburb of Kansas City.

Chrysler and the other automakers, both foreign and domestic, have been battered by the recession and credit freeze. In December the federal government agreed to lend $4 billion to Chrysler and $13.4 billion to GM.

A week from Tuesday, the two companies must outline to the U.S. Treasury how they will become viable.

atablac@post-dispatch.com | 314-340-8140

Source