Chrysler Midsize-Car Plant Restart Questionable
May 22, 2009
By Bill Visnic
Not yet a month into its Chapter 11 bankruptcy, news is starting to emerge about which pieces of Chrysler's manufacturing puzzle are likely to serve a purpose in the proposed new Chrysler-Fiat global alliance -- and which won't.
One that clearly has no future is Chrysler's Sterling Heights, Michigan plant, just outside of Detroit. The plant assembles the unloved and underachieving Chrysler Sebring and Dodge Avenger midsize sedans and two-door convertibles.
The plant is slated for permanent closure by December 2010, and on Thursday, about 400 United Auto Workers union members and community residents rallied outside the plant. They were not only protesting this specific plant's closure but also sending a message to Congress that it's wrong for an automaker to take billions in taxpayer dollars and then close U.S. plants before those in other countries.
Meantime, some are questioning if the midsize-car plant will restart after the hiatus all Chrysler plants are on during Chapter 11 proceedings.
When shutting down its manufacturing operations on May 4, after its Chapter 11 filing, Chrysler said, "Normal (vehicle) production schedules will resume when the (bankruptcy) transaction is completed, which is anticipated within 30-60 days."
Chrysler officials insist the Sterling Heights plant will restart at some point. But the supplier source told AutoObserver it very well may not.
Could Move to Illinois
The source said Chrysler has run trial assembly of the Sebring/Avenger at its Belvidere, Illinois, assembly plant that currently builds the Dodge Caliber and Jeep Compass and Patriot compact cars. The Belvidere plant is one of Chrysler's more modern facilities, and Chrysler spent more than $400 million in 2006 to update the plant with flexible body shop tooling to enable production of multiple vehicle platforms.
Like Sterling Heights, the Belvidere plant is deeply underutilized, as sales of Chrysler's compact cars have withered. And Chrysler manufacturing sources had indicated in the past that Belvidere could be used to source midsize cars.
The Sterling Heights plant already was announced as one of eight Chrysler manufacturing facilities that will be permanently closed -- but not until next year. Chrysler's statement earlier this month regarding Sterling Heights said, "A severe decline in the market has resulted in reduction of volumes and thus made operation of this plant not possible. The plant is expected to continue operation through December 2010."
But the supplier source believes it is unlikely that production at the plant will ever be resumed now that it has been shut down during the company's bankruptcy. The plant has been operating on a single shift since the first quarter of 2008.
No Hurry To Resume Production
It is almost certain that Chrysler has enough inventory of the slow-selling Sebring and Avenger models to last for a lengthy transition period if it is decided to transfer assembly to the Belvidere plant: Through the first quarter, Sebring sales dwindled by 81 percent, to just 5,636 units. Avenger sales plunged 66 percent in the first quarter, to 8,553 units.
Meanwhile, Chrysler needs some 168 days to sell a Sebring, according to Edmunds.com's
proprietary days-to-turn (DTT) data. Avengers typically sit on dealer lots for 138 days. In fact, according to Edmunds data, the two Chrysler midsize cars had among the highest days-to-turn numbers in the segment, which averages 99 days. In contrast to the Chrysler pair, April's best-selling midsize car, the Honda Accord, had a days-to-turn rate of 85, meaning an Accord spends about half the time on a dealership lot as a Sebring.
These figures were generated prior to Chrysler's announcement of bankruptcy, which is likely to have a further depressing effect on sales -- and consequently inflate DTT.
Finally, if Chrysler chooses to permanently shutter the Sterling Heights plant at this time, the move could cast a shadow on the continued production of the Sebring and Avenger on a new platform that was vividly outclassed even at its launch in 2006 for the '07 Sebring.
One probable option will be consolidation of the cars to a single nameplate to reduce expenses while new Fiat management concocts a strategy for future replacement.
Sweetened Buyouts Offered
Meantime, Chrysler is offering sweetened buyout deals for UAW workers at six plants, including the Sebring-Avenger plant, likely to be closed if no buyer can be found.
Workers now are being offered up to $115,000 plus a $25,000 vehicle voucher to leave Chrysler voluntarily. The larger lump-sum payment, which was increased from $75,000 in earlier buyouts, is available to workers under 50 years old who have 10 or more years of seniority, the Detroit Free Press reported.
Workers 50 or older who qualify for some pension benefits won't receive that type of one-time payment. But those with 30 years, or whose age and years together exceed 85, will receive $50,000 plus the $25,000 voucher for a new Chrysler vehicle.
Workers have until May 26 to accept the offer.
Photos by Chrysler
1. Chrysler Sebring convertible has a folding hardtop.
2. Dodge Avenger is the better-selling of Chrysler's midsize sedans.
Posted by Michelle Krebs at 12:39 PM under Chrysler , Companies , Featured , Rumors | Comments (2) | digg this | Seed Newsvine
"One that clearly has no future is Chrysler's Sterling Heights, Mich. plant, just outside of Detroit."
I find the use of the word clearly presumptuous. Another example of 'analysts' or whatever title the author chooses to operate under predicting doom and gloom. I would love to see some retractions later from people on this site and perhaps Warren Brown of the Washington Post and other columnists that follow the auto industry when their predictions fail to pass. As I have stated in other posts these are possibly the same people who wrote "Clearly GM is much further in their turnaround efforts than Ford" 1.5-2 years ago.
Posted by: georgehughes35 | May 22, 2009 at 6:28 AM
The Sterling Heights plant facility was, at one time, owned by Volkswagen. Perhaps it still is.
Posted by: cabrio8 | May 25, 2009 at 8:44 AM