TORONTO (Reuters) - Chrysler LLC’s decision to shut down its St. Louis minivan plant is good news for the company’s van plant in Windsor, Ontario, although it underscores the long-term uncertainty of the van segment, an analyst said on Monday.
“I think for now the production there is safe,” said Aaron Bragman, an automotive analyst at Global Insight, of the Windsor plant, which currently runs three shifts producing the industry-leading Town & Country and Dodge Grand Caravan minivan models.
“You had two plants competing for basically the same product, and quite frankly the volumes simply aren’t there to sustain both plants anymore.”
Chrysler, the No. 3 U.S.-based automaker, said it will “indefinitely idle” the St. Louis South assembly plant, effective October 31, due to volume declines in the total minivan vehicle segment.
The Windsor plant will not escape completely unscathed. A company spokesman said it will shut for three weeks of inventory adjustment in July and August. The closure will come in addition to a regular week-long holiday shutdown.
Ken Lewenza, president of Canadian Auto Workers union Local 444 at the Windsor plant, said the St. Louis closure sends a disturbing message about the ability of Windsor to sustain three shifts of production over the long term.
“It’s a bitter pill to swallow. It doesn’t affect us today, but if the market continues to decline, you can’t ignore the fact that we could be the next hit,” he said.
Chrysler, acquired by private equity group Cerberus Capital Management CBS.UL last year, has seen its U.S. sales drop 19 percent so far in 2008 -- the largest drop of any major automaker.
Reporting by Cameron French; Editing by Peter Galloway