Future of Del. Chrysler plant dims
Supplier, subcontractor dependent on Newark facility issue layoff notices
In another ominous sign for the future of DaimlerChrysler's Newark assembly plant, two Delaware businesses that depend entirely on the plant issued warnings to workers of layoffs that could come as early as next month.
Collins & Aikman, a Chrysler supplier, and Caliber Auto Transfers, a subcontractor that loads Durangos and Aspens onto rail cars, have filed separate layoff notices with the Delaware Department of Labor, state labor officials said Tuesday.
The notices come as Chrysler's 2,100 assembly-line workers and 395 employees of eight local suppliers brace for news of the plant's fate. Next week, Chrysler executives are expected to outline the company's restructuring plans that are aimed at helping the company recover from a $1.5 billion loss in the third quarter in 2006.
Analysts have speculated that the Newark plant, with its slow-selling sport utility vehicles, will shut down as part of the cost-cutting strategy. As many as 10,000 Chrysler workers could lose their jobs nationwide, analysts say. Some predict the plant will close in 2009, when the Durango is scheduled for a major redesign. Chrysler may transfer production to one of several plants in the Midwest where the Durango can be built along with other trucks.
"If the plant closes, the suppliers will probably have to close up as well," said Erich Merkle, director of auto forecasting for IRN in Michigan.
But Merkle said auto suppliers in Delaware, which are reliant on Chrysler, likely already are suffering the consequences of weakened demand for the Durango.
"The suppliers already have been adversely impacted by the sharp decline in volume," Merkle said.
Any time the Newark plant reduces production, suppliers have to adjust their work force. Production of the Durango dropped 40 percent last year, to 65,954, from 109,866 a year earlier.
Collins & Aikman, which organizes instrument panels for assembly in the Durango and Aspen, said it may lay off all 40 of its workers in Newark and halt operation by March 3. The Southfield, Mich.-based auto-parts maker is in the middle of reorganization through bankruptcy, largely because it has been losing money from cutbacks in production by its largest customers: Chrysler, General Motors Corp. and Ford Motor Co.
But last year, Collins & Aikman's creditors decided they have a better chance of recovering their assets by liquidating the company's facilities than by trying to recover business. The company notified Chrysler in January that it may be forced to shutter its Newark plant if it is unable to find a buyer.
Finding a potential buyer at a time when the fate of Chrysler's plant is uncertain is a challenge, said David Youngman, spokesman for Collins & Aikman.
Collins & Aikman already has closed five factories and cut more than 1,100 jobs after liquidating assets in several states. The company's operation in Havre de Grace, Md., which employs 225 workers and supplies Newark, is also in danger of closure, Youngman said. Chrysler is currently subsidizing the operations of both these sites.
"The timing of the closure will be dependent on our customers' production needs," Youngman said.
Meanwhile, Caliber Auto Transfer, a Detroit-based company that operates in Newark, also has told its estimated 15 employees they may lose their jobs by March 4. Caliber is one of several contractors that works with Norfolk Southern, helping the railroad company load Durangos onto rail cars for shipment.
The company is in the process of negotiating its contract with the railroad and may have to lay off its workers.
"Whenever that contract is up, there is a chance that there may be another person that is going to come in and do the job," said Boyd Dickens, operations officer at Caliber Auto.
Dickens said the notice to the state was not directly tied to Chrysler's expected Feb. 14 announcement. But he said the Newark plant's future will have a direct impact on his business.
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