Chrysler to Stop Production on December 19th

It has just been announced that U.S. car manufacturer Chrysler is to shut down its production lines for one month. The stance taken by the firm is in response to a massive decline in sales over the last year. The growing concern over the debate in government about a rescue package for the sector has also helped sway the decision on the measure.

Chrysler had recently submitted plans to stabilize production in its own manifest submitted to the Senate Committee on Banking, Housing and Urban Affairs. Also the Committee on Financial Services.

"As a result of the financial crisis, the automotive market remains depressed due to the continued lack of consumer credit for potential buyers,"

Statement made by Chrysler

The shock announcement means that production will stop from 19th of December 2008. The current state of the economy and a very low sales volume is what has prompted the drastic measure. Employees of Chrysler will not be able to return to the production line until at least 19th of January 2009.

The statement from Chrysler spokespersons went on to say. "Last week several automakers announced significant downward adjustments in production for the first quarter of 2009." The statement also said. "To make sure our inventory remains aligned with market demand, Chrysler will also extend the holiday shutdown already in place. All operations will be idled at the end of the shift on Friday,"

Employees who are already unsure of there current employment status, will be even more fearful for the future of there jobs. Fears that are growing, due to the already troubled automobile industry. Chrysler have already shaved back its workforce, and stopped production of four of its vehicles. In what looks like the most testing times ahead for the 80 years old auto giants.

The news filtering out from Chrysler comes just a day after the U.S. Senate had told the auto industry, that it would have to make concessions in order to win a government bail out.

During recent talks held with the Whitehouse, the big three, GM, Ford and Chrysler, all warned of looming unemployment. They said that millions of jobs could be lost, sending a rippling effect across the already faltering U.S. economy.

Today's measures by Chrysler, could be the beginning of that message sent. As loses at a record high, and the need to balance the books, hits the company hard. It is sure to have an adverse effect on the stock market overnight.

My opinion:

As the big three brace themselves for the next round of talks, I wonder... What signals the action taken by Chrysler will send to the Whitehouse? And will Ford and G.M be quick to follow suit. There is no word as yet from Chrysler, if staff are to be paid during the shut down. One hopes that pay will be honored, as families will already be struggling with finances. Especially as it is Christmas time, I would hope the festive cheer of Chrysler Group has not been affected.

Sources: CNN Money, Tune, Chrysler.