Chrysler resolves dispute with Plastech

February 5, 2008 10:13:44 AM PST
There is good news for workers at some Chrysler plants.

Chrysler LLC and struggling parts supplier Plastech Engineered Products Inc. have resolved a dispute that led Chrysler to suspend production at of four auto assembly plants.

The deal announced Tuesday paves the way for Plastech to resume sending parts to the automaker and means Chrysler can restart production at the assembly plants that had been closed due to a lack of interior and exterior parts.

A shift was cut at a fifth plant as the financial dispute threatened to close all 14 Chrysler assembly factories. A total of 10,500 workers were affected.

Plastech general counsel Kelvin Scott said the company would begin producing parts for Chrysler starting with Tuesday's second shift. It was unclear when Chrysler production would resume.

Plastech, which supplies Chrysler with about 500 plastic interior, exterior and powertrain components for nearly all of its vehicles, filed for Chapter 11 bankruptcy protection on Friday after the automaker told the supplier it was seeking other sources for the parts.

Chrysler sued Plastech on Friday, claiming Plastech no longer could meet its production demands. The automaker sought an immediate resumption of parts production as well as the tools to make the parts, which it owns.

Without the tools, Chrysler said in its lawsuit that it eventually would have to cease production of vehicles systemwide.

Plastech's contracts with the automaker were worth about $200 million. Plastech does about $1.3 billion in total business, including contracts to supply General Motors Corp. and Ford Motor Co.