Chrysler's Canadian plants halt production

A parts shortage resulting from Chrysler's restructuring under U.S. bankruptcy protection has forced the company's Canadian branch to halt its assembly operations indefinitely, a spokeswoman said Friday.

Mary Gauthier said a number of suppliers have stopped shipment of parts to its Canadian manufacturing facilities after its parent company Chrysler LLC said Thursday that it will shut down its U.S. plants for 30 to 60 days while it completes a technology-sharing alliance with Fiat.

Chrysler Canada is not involved in the bankruptcy filing, but the parts shortage forced the closure of its plants as well.

Gauthier said Chrysler's two southern Ontario plants, in Windsor and Brampton, ceased production Friday and would remain closed "until further notice," putting about 8,700 people out of work indefinitely.

The news came as documents in Chrysler LLC's bankruptcy case revealed the automaker has plans to close five more of its U.S. plants permanently by the end of next year.

Rick Laporte, president of Canadian Auto Workers Local 444 in Windsor, said Chrysler employees will receive about 65 percent of their regular salary under supplementary unemployment benefits and employment insurance.

Parts suppliers agreed Friday that Chrysler's restructuring is good news for their industry in the long run, but layoffs, plant shutdowns and consolidation will be the norm until the industry stabilizes.

Rob Wildeboer, executive chairman of Canadian parts supplier Martinrea International Inc., said his company will be forced to temporarily lay off workers while Chrysler ceases production. Chrysler is one of Martinrea's top four customers.

Martinrea has 10 Canadian plants, all in southern Ontario, and employs 4,400 people worldwide. It is one of many Canadian auto parts suppliers that will be affected by Chrysler's restructuring, including Magna International Inc. and Linamar Corp.

Wildeboer would not say how many Martinrea employees will be affected by the Chrysler shutdown.

Bill Pochiluk, president of industry adviser AutomotiveCompass, said the unexpected shutdowns may result in the disintegration of the supply chain.

"If we're talking about almost a universal shutdown of Chrysler for 30 to 60 days, that has enormous bad cash flow implications for suppliers, and we suspect that suppliers particularly dependent on Chrysler will have some trouble financing their operations in the near term and some will be inclined to basically call it a day," he said.

The number of jobs lost at Chrysler will pale in comparison to the fallout as the parts industry consolidates.

Gerry Fedchun, president of the Automotive Parts Manufacturers' Association, said it's impossible to guess how many jobs will be lost in the Canadian supplier industry, but it's widely estimated that every one job lost in an assembly plant leads to a total of seven jobs lost in the economy as a whole.

Export Development Canada said last month it will provide $700 million Canadian dollars ($585 million) in receivables guarantees to insure parts manufacturers against nonpayment from troubled automakers.

The auto parts industry employs approximately 79,000 Canadians and is largely based in southern Ontario.