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as reported on the globalandmail

The car plant in Brampton, Ont., that helped pull DaimlerChrysler AG out of the financial mud will shut down for two weeks in November — the first cut in output of the Chrysler 300 and other rear-wheel-drive cars that have been a smash hit for the company.

The shutdown, part of a big slice in fourth-quarter production at Chrysler group plants across North America, is also a sign that the auto maker, regarded as the healthiest of the Detroit-based three earlier this year, is being battered by the same storms hammering Ford Motor Co. and General Motors Corp. Three more weeks of down time have been scheduled at the plant in the first quarter of 2007, union officials said Monday.

“We've had a good run,” said Leon Rideout, plant chairman of local 1285 of the Canadian Auto Workers union, which represents about 3,900 workers in Brampton who will be furloughed for the weeks of Nov. 13 and Nov. 20.

The production cuts mainly affect Chrysler's truck plants, union and industry sources said Monday, including a factory in Newark, Del., that assembles Dodge Durango sport utility vehicles—which will be cut to one shift in the fourth quarter—as well as a plant in Mexico that makes the PT Cruiser.

High gas prices in the U.S. have whacked sales of trucks and sport utility vehicles, the major source of profits for Chrysler and other auto makers. The slide in sales of those vehicles will contribute to a wider-than-expected operating loss of about $1.5-billion (U.S.) for Chrysler in the third quarter.

There will be “significant production cuts in the third and fourth quarters,” Chrysler vice-president of public affairs Jason Vines said in a note on the company's weblog for media and analysts. He said many drivers have already made the move to more efficient crossover utility vehicles and passenger cars and the auto maker is in the midst of launching several of those, including the Dodge Caliber and Nitro and the Jeep Compass.

“Looking at the bigger picture,” he said, “the North American vehicle market is simply more fragmented, with more players dividing a sales pie that isn't growing.”

The profit warning came just a week after the United Auto Workers refused to grant Chrysler the same concessions on health care costs that it gave to Ford and GM, saying that Chrysler was in better shape financially. DaimlerChrysler pointed on Friday to “non-competitive legacy costs for employees and retirees” as one factor hurting Chrysler in North America.

DaimlerChrysler Canada Inc. spokesman Ed Saenz would not comment on Brampton, where the 300 sedan, Dodge Magnum station wagon and Dodge Charger helped generate operating profits at the Chrysler group when they went on sale in 2004 and again last year and helped restore the company's reputation for successful vehicle design. But trade magazine Automotive News quoted information from J.D. Power and Associates Monday showing that the number of days the 300 has been sitting on dealers' lots has almost doubled. That period sat at an average of 86 days in August, compared with 44 days in January. The average transaction price slid to $29,553 (U.S.) from $30,964 in the U.S. market.

Chrysler's overall U.S. sales slumped 10 per cent from year-earlier levels as of the end of August.

Sales of the Chrysler 300 were about flat, while Magnum sales fell 27 per cent, but that was more than made up for by Charger deliveries, which increased more than four-fold from year-earlier levels.

The moves at Chrysler follow production cuts of 21 per cent at Ford's North American operations and 12 per cent at GM factories.

Those cuts have already led to layoff announcements at several parts companies in Ontario.
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