Chrysler plans production cuts, may idle St. Louis plant

Bradford Wernle and David Barkholz
Automotive News
June 30, 2008 - 3:25 pm ET

Chrysler LLC plans to idle its St. Louis South minivan plant indefinitely, effective Oct. 31. Chrysler is also cutting production at its St. Louis North truck plant to one shift, effective Sept. 2.

But Chrysler co-president Tom LaSorda said Monday that it is not likely the plant will reopen.

"We see no intent to rerun this plant. We're idling it and it will likely be fully closed."

St. Louis South, in Fenton, Mo., has been making minivans on one shift and employs about 1,500 workers. The St. Louis North plant, which had been working on two shifts, will lose 900 jobs after the second shift ends.

St. Louis South makes three vehicles: the Chrysler Town and Country, the Dodge Grand Caravan and the Chrysler Grand Voyager for Europe. Chrysler also makes minivans at its Windsor, Ontario, assembly plant on three shifts. Two of those shifts make Chrysler Town and Country and Dodge Grand Caravan minivans. The third shift makes the Volkswagen Routan.

LaSorda said Chrysler had a difficult choice to make between Windsor and St. Louis South: "When you look at one plant on three shifts and another on one, we had no choice but to go with the volume plant. We have the capacity for three shifts of work. So that's what we did. Those are the tough decisions we have to make."

For the first five months of 2008, sales of the Chrysler Town & Country and Dodge Grand Caravan have declined 13.4 percent and 34.6 percent respectively.

Jim Press, Chrysler co-president, said economic factors drove Chrysler's decision.

"Obviously we're at slow point. Consumer confidence has been hit by oil prices and the credit crunch. It has created a situation if we want to meet or exceed the targets we have to move responsibly. We're a market-driven company and it's important to match production" to sales.

St. Louis lost out for political and economic reasons, said Glenn Kage Jr., financial secretary at UAW Local 136 representing workers at the St. Louis North pickup plant.

Chrysler can make minivans in Windsor, Ontario, for $1,000 per vehicle less than St. Louis South because of the savings to the company of Canada's national health care system, Kage said.

St. Louis North also is at a disadvantage because it is smaller than its counterpart pick-up assembly plant in Warren, Mich., Kage said. St. Louis North can churn out only 41 pickups per hour at full capacity compared with 65 at Warren, he said. Politically, Chrysler was more willing to sacrifice a plant in St. Louis far from Detroit than a plant like Warren or Windsor in its own backyard, he said.

"Detroit's a national industrial hub and we're far away," he said.

Kage downplayed the influence of labor relations on the decision. St. Louis North and South soundly defeated last fall's master contract agreement between Chrysler and the UAW.

That defeat encouraged dissidents and forced a full-court lobbying effort at crucial Detroit-area locals by UAW President Ron Gettelfinger and his minions to narrowly pass the contract. One of the locals that passed the agreement was Warren Truck.

"I wouldn't put too much into the negotiations," Kage said. The St. Louis UAW locals already had key local operating agreements before the master negotiations, granting flexibility in work rules and other factory operations, he said.

Kage said Chrysler has spent about $300 million over the past two years on plant improvements at St. Louis South and $500 million at St. Louis North. He said he hoped the State of Missouri would audit the tax abatements granted for the investments in light of job promises made for the factories.