Workers at Chrysler LLC's Newark assembly plant are scheduled to return to work today after the automaker reached an interim agreement Tuesday with parts supplier Plastech Engineered Products Inc.
Chrysler, the third-largest U.S. automaker, abruptly shut five of its plants on Monday in a dispute with Dearborn, Mich.-based Plastech, which supplies the automaker with about 500 different types of plastic parts for the interiors, exteriors and powertrains of Chrysler vehicles. The company is also a big supplier to the other members of the Big Three automakers, General Motors and Ford.
The Chrysler shutdown temporarily idled about 10,500 workers, including the 958 workers at the Newark facility who make the Dodge Durango and Chrysler Aspen sport utility vehicles. Chrysler plants in Rockford, Ill., Sterling Heights, Mich., and two plants in Toledo, Ohio, were also affected. Workers at those plants returned to work either Tuesday or today.
Under the agreement, Plastech will resume shipping parts to Chrysler through Feb. 15, the scheduled date for a U.S. court hearing in the matter. The dispute centers on the automaker's efforts to get its equipment, used for making plastic parts for Chrysler vehicles, back from Plastech, said Erich Merkle, an auto industry analyst with IRN Inc. in Grand Rapids, Mich.
"If Plastech shuts down, the Big Three shut down," he said.
The dispute points out the increasingly strained relations between U.S. automakers, which are trying to cut costs, and parts suppliers -- many of which are struggling financially.
"The Big Three don't think you should be making money if you're a supplier, because they're not making money," Merkle said. "They're finding out they can't make a car if their suppliers aren't healthy."
Japanese automakers, such as Toyota and Nissan, have largely been able to avoid these problems because they're more aware that their suppliers need to be financially viable, Merkle said.
"They're tough and they want a good price, no question," Merkle said of the Japanese automakers' approach. "But they're much more committed to making sure their suppliers are financially healthy."
Merkle said he expects Chrslyer to reach a long-term agreement with Plastech to keep parts flowing beyond Feb. 15.
"They still have to figure out what to do in the long term," he said. "I think Chrysler's going to do what it has to do because they understand the implications."
Chrysler announced last year it plans to close its Newark facility by the end of 2009.