Chrysler closes plants, reopens talk of merger

Chrysler plans to halt production at all 30 of its factories for one month, and is reportedly revisiting talks of a merger with General Motors, as both firms are witnessing their cash reserves dwindle. ┬á The moves come as other US and foreign automakers are announcing steep production cuts that will idle tens of thousands of other US workers as the industry copes with withered demand for new cars and trucks. Ford said yesterday that it would stop production for an extra week in January at all but two of its plants because of flagging consumer demand. General Motors said Friday that it will cut production and temporarily close 20 factories. ┬á Chrysler's plants will lay off 46,000 workers beginning Friday, as a planned two-week holiday shutdown is extended to a month or longer.┬á "No one will return to work any earlier than Jan. 19," Chrysler spokesperson Shawn Morgan said. "I don't want to get into speculating about what may happen after that. . . . We're going to continue to monitor the situation."┬á Chrysler owner Cerberus Capital Management LP has indicated its willingness to give away part of its ownership in the carmaker, and reportedly took the initiative to restart talks after a plan to issue $14 billion in loans to the automakers died in the Senate.┬á The Bush administration has indicated it would consider using some of the $700 billion financial industry rescue program to help Detroit. "It's clear that the automakers are in a very fragile financial condition, and they're taking steps to deal with it," White House spokeswoman Dana Perino said yesterday. "We're aware of their financial situation and are considering possible policy options to provide assistance in an appropriate way. As we've said, a disorderly collapse of the auto industry should be avoided." The industry shutdowns offer insight into the kind of economic damage the domestic auto industry's collapse could cause. The Big Three -- GM, Chrysler and Ford -- employed about 240,000 U.S. workers at the end of 2007. Foreign automakers employed about 113,000 people in the United States, and the US auto industryÔÇÖs suppliers employ an additional 975,000 people. The furloughs "are a harbinger of things to come if these loans are not secured," said Dennis Virag, president of the Automotive Consulting Group in Ann Arbor.