Posted on 12/17/2008 2:31:26 PM PST by TenthAmendmentChampion
DETROIT (Reuters) - Chrysler which has over 100,000 US employees is closing it's plants for at least one month as the company does it's best to save money and sell off existing stock. Earlier in the day Chrysler LLC's finance arm has told dealers it may temporarily stop loans used by dealers to stock vehicles because the retailers pulled money from a fund that helps finance them.
Chrysler Financial Chief Executive Tom Gilman sent letters to dealers, dated Dec. 12, that asked them to refrain from withdrawing large amounts from a "cash management account" used to finance the loans, a source familiar with the letter said.
Withdrawals from the fund, which have totaled more than $1.5 billion since July, have caused a drain on Chrysler's resources and could limit the company's ability to offer financing to dealers to buy vehicles, according to the letter.
Chrysler Financial said in a statement that it finances 75 percent of all vehicles shipped to U.S. dealers and continues to support its dealer network with "uninterrupted" wholesale financing. The letter said about $60 million a day is being withdrawn from the account, which is "well above our historical daily advances."
Chrysler dealers were paid a bonus if they kept money in the account.
Talk about potential bankruptcy at Chrysler, which is seeking federal loans to survive through March, has spooked dealers, who withdrew heavily from the account in the past few months.
Chrysler has asked dealers to only withdraw "what is absolutely necessary" from the fund, according to the letter.
Chrysler, which has seen sales fall 28 percent so far this year, is also facing pressure from some suppliers who were insisting on being paid in advance for goods.
When Chrysler did this in the early 80’s, I was a young pup then but I think my dad got unemployment and a small check from the union... iirc
Regardless of what got the automakers to this point, this has got to be stressful for the folks involved and I pray this turmoil ends soon.
“They’re dead, Jim”
I don't know for sure but I would bet the farm they are being paid full wages.
Not aunt Edna Lee Iaccoca
well 40 ozers and some tasty bud maybe
“ozers”
Another FReeper word, Al?
Hmm, is it too early for a brewski? I better run a quick test...
Even if they’re paying full wages, Chrysler gets to save money on other expenses, like those of operating a plant. Not to mention rent saved on places to park all the cars that would have piled up in addition to the ones they have already that aren’t selling.
UAW workers are paid 95% of their regular wages through the SUB (Supplementary Unemployment Benefit). This basically supplements the state unemployment benefit with money from the companies to reach the 95% amount. I don’t know how long it lasts but, it is a contractual obligation and has been so for a long time.
when I lived in Michigan, they were getting unemployment obviously, plus UAW sub-pay. Unemployment comp + sub pay equaled 95% of the base wage, resulting in scenarios like “hey, lay me off first, I have seniority!” Lots of guys were getting 13-week vacations at 95% of their base pay. I have no idea if that is the case at present.
Such as paying their employees not to work and/or paying their employees double the wages of non-union workers?
I pray this turmoil ends soon
Most assuredly your prayers will be answered, they always are, sometimes not the way we wish they were but none the less, they are answered.
Your dads union ruined Chrysler
You really need to get your facts straight.
I suspect the others will follow suit. They may be locked into contracts, but racking up operating costs is pointless if you’re just piling up inventory.
Chrysler also said they won’t be originating any new car loans. It looks like dealership are getting sent to the scaffold in big numbers this coming year.
People really need to get prepared for 2009:
1. Pay off your debts.
2. Raise/conserve cash.
3. Pray.
Enlighten me.
Check out the thread in my tagline, lots of information about that.
The White House is to announce a plan for the Big-3 on Friday.
Heard this is happening at the euro car factories as well. I know that Porsche announced a few weeks ago that they are going to shutdown all production for one week a month starting in Decemember going forward as demand for new cars has fallen off the cliff and I’m sure many of their leased cars are being returned early creating a massive glut.
In germany, the auto industry is 10% of the entire countries workforce.
I’m looking at 2009, and if your in the market to buy a home or a car, there is going to be amazing deals to be had.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.