US auto maker Chrysler LLC has closed four auto assembly plants signaling that the company is taking a get-tough approach to the industry's ailing suppliers.Shutting down the plants will lower Chrysler's revenue as auto makers book sales when vehicles are shipped from the plant. But it will also cut the amount of cash the company is spending each day, said the report.
The closures stem from a dispute with Plastech Engineered Products Inc., a maker of plastic parts that filed for bankruptcy-court protection Friday. The filing came hours after Chrysler announced it was terminating its supply contract with Plastech. In court documents, Plastech said it was “forced” to seek court protection by Chrysler's action.
Chrysler's strategy in dealing with Plastech represents a break from Detroit's tradition of pumping money into suppliers in the hope they will turn around, said the report.
Aaron Bragman, an analyst with Global Insight, said it is unusual for an auto maker to cut contracts without having backup suppliers, as the company runs the risk of shutting down production lines, which is costly. (Xinhua)