Suppliers wary over Chrysler plant plans

St. Louis plants build Chrysler's core products, including the Ram pickup.

Suppliers wary over Chrysler plant plans
Robert Sherefkin
Automotive News
September 10, 2007 - 12:01 am EST
Chrysler LLC's new owner says it is pushing ahead with the company's plans. Suppliers, though, aren't so sure.

The suppliers' wait-and-see attitude is evident around Chrysler's two St. Louis assembly plants.

Suppliers rushed to locate nearby after Chrysler's 2005 announcement that it would spend as much as $1 billion to upgrade the plants. The factories build core products in Chrysler's lineup: the Dodge Ram pickup and Chrysler and Dodge minivans.

Space inside Chrysler's supplier park filled up, says Gary Parker, a commercial real estate specialist with Senso Group, of St. Louis. Demand then spilled into nearby communities such as Pacific, Mo.

Suppliers Flex-N-Gate Corp. and Visteon Corp. will soon open plants in the area. But what had been strong interest by still others "has been put on hold," says Harold Selby, a former state representative and Pacific's city administrator.

Part of the change, he says, was because of the August stock market tumble, which was spurred in part by investor fears about the subprime mortgage market. But suppliers also are watching the moves by Chrysler's new owner, commercial real estate executives say.

Before then, "We were getting a lot of inquiries," Selby says. "We got five to six suppliers visiting us; some as far away as Spain."

Cerberus Capital Management last month completed its acquisition of an 80.1 percent stake in Chrysler for $7.4 billion. It is not clear what plans the private equity group has for the St. Louis plants.