Wednesday, February 6, 2008


CHICAGO, IL -- Chrysler on Monday idled production at four assemblyplants amid a dispute with Plastech over the auto maker's access totooling at Plastech plants. Plastech filed for bankruptcy protectionlate Friday after Chrysler canceled its contracts with the supplier.The plants reopened Tuesday afternoon after Chrysler and Plastechreached an interim agreement, valid until Feb. 15, that restored shipments of Plastech components for Chrysler. Plastech, which wasseeking financial help from its biggest customers, claims that it was forced into bankruptcy by Chrysler's decision to cancel contracts, aclaim that Chrysler refutes. Chrysler Chief Executive Robert Nardelli said Wednesday the company is going to continue with its plan to move its parts contracts away from Plastech Engineered Products Inc. to other suppliers."This was not hard-ball tactics, it was a solid business practice,"Nardelli said on the sidelines of the Chicago Auto Show, referring toits decision last week to pull contracts with Plastech. "We nevermeant to create an adversarial relationship with Plastech or any othe rsuppliers."On Wednesday, Nardelli said that Chrysler hadn't adopted "hammer and nail" tactics. He said Plastech had informed Chrysler that the cost of business was going to go up and that the auto maker determined it couldn't afford to do that."We have to stay competitive. Our customers expect that," Nardellisaid. " Obviously if they're not financially sound, we certainly aren't in the business of subsidizing. No hard feelings, no animosity,just solid business practices."Nardelli, the former CEO at Home Depot Inc. (HD), took over the top post at Chrysler last year after the struggling auto maker was acquired by Cerberus Capital Management LP. Under its new management, Chrysler has adopted a tougher stance in its dealings with suppliers as it focuses more on cash flow than earnings. Nardelli said that Chrysler, which is struggling to restore profitability, may be in a better position than its competitors because of actions to scale back production to match low expectations for sales in the U.S."And if we're wrong (on the sales view), we will have to take other steps," Nardelli said.
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