Chrysler to close one plant

June 30, 2008 1:14:05 PM PDT
Chrysler LLC said Monday it will close one Missouri plant indefinitely this fall and cut production at another due to slumping demand for trucks and other large vehicles. Officials with the Auburn Hills-based automaker said in a conference call that it will shutter the St. Louis South plant, which makes minivans, effective Oct. 31. The St. Louis North plant, which makes full-size pickup trucks, will reduce operations from two shifts to one.

Chrysler President and Vice Chairman Tom LaSorda said the company has no plans to reopen the minivan plant. He added demand for minivans can be handled by three shifts, so the company has no need to operate two factories. Its other minivan factory is in Windsor, Ontario, in Canada.

"We see no need for the capacity in the future," he said.

LaSorda also denied rumors that Chrysler's new owners, Cerberus Capital Management LP, had plans to sell the company in pieces.

"Hogwash, absolutely not being considered at all," he said. "Absolutely no relevance. I don't even want to entertain those questions."

A slowing economy and gasoline prices above $4 per gallon have cut U.S. car sales. Those who are buying are picking more fuel-efficient models.

LaSorda said the private company is meeting or exceeding its financial targets but "this environment is forcing us to make some very difficult decisions."

General Motors Corp. and Ford Motor Co. already have announced cuts due to the latest market downturn. Chrysler announced cuts in November, but analysts have said the company needs to do more.