Chrysler Hit By Strike Dispute Halts Production Of Popular Trucks, Suvs
Chrysler Corp. said production of the highly profitable Jeep Grand Cherokee, Dodge Ram pickup and two other truck models will grind to a halt today because of a strike at a Detroit engine plant.
About 1,800 members of the United Auto Workers went on strike Thursday at the Mound Road plant after negotiators failed to reach agreement on a new local contract.
The strike occurred on the same day the nation’s No. 3 automaker reported a record first-quarter profit of $1.03 billion, a 2 percent gain over the first three months of 1996.
Chrysler has been the most profitable of the Big Three automakers in large part because it produces far more trucks than cars. Demand for trucks has been strong while car sales, which generate less profit, have declined.
The walkout will shut down production of the Jeep Grand Cherokee in Detroit, Dodge Ram and Dakota pickups at the Dodge City complex in Warren, Mich., Ram pickups at St. Louis, and full-size Ram vans in Windsor, Ontario.
The move will affect 12,080 workers at those plants.
The pickups and Grand Cherokee are some of Chrysler’s most popular light trucks.
Chrysler said customers should not have trouble finding the affected models on dealer lots - for now. Chrysler has a 60-day supply of Grand Cherokees and Ram pickups, considered normal by industry standards.
Major issues in the negotiations include plant health and safety, discrimination against minority workers and Chrysler’s move to shift some parts production to outside suppliers, Local 51 President Sam Nardicchio said. He declined to elaborate.
Negotiations with Local 51 began in January after Chrysler signed a national contract with the UAW in late 1996. That plant is Chrysler’s only U.S. manufacturing site without a local contract.
A prolonged strike could severely hurt the automaker.
“If it lasts for a significant length of time, it’s going to put a dent in profits - a big dent,” said industry consultant Christopher Cedergren of Nextrend.
The Big Three automakers have made themselves more vulnerable to strike-related production interruptions by adopting so-called lean production methods. They have narrowed the number of sources for each part. And engines and other parts are delivered to assembly plants only as needed to save on storage expenses.
“It’s maybe too much reliance on one plant, but you really need to do that these days to get the cost efficiencies,” Cedergren said.
Negotiators were meeting Thursday to work out a schedule for further talks. “Our hope is we can get to the weekend and then we’ll have a couple more days to talk,” said Gary C. Valade, Chrysler’s chief financial officer.