Thursday, December 18, 2008

Chrysler to shut manufacturing plants

Lets hope that this is not a sign of things to come, but Chrysler announced yesterday that they would be shutting all of the North American manufacturing plants for 30 days as they await a Government bail out package. All three automakers have been taking steps to survive the current recession and it seems that Chrysler feels that by closing their plants they will lose less money then by opening them up. This is real sad news. Both Chrysler and GM are afraid that they will not have enough money to make it through the end of the year.

The closing of the plants is somewhat normal. Usually during the holiday season all plants are closed for two weeks but this year due to the economic situation they have extended it to four weeks. My question is will it help? From news reports the car companies are suffering from two problems the recession and credit. Many car dealers are reporting that they have people coming into the show rooms to buy but are unable to get credit approval. This could be a bigger problem. If banks do not lend, even after receiving all the government assistance, then the auto makers will be in bigger trouble.

In a statement from Auto Dealers,

"The dealers have stated that they have lost an estimated 20 to 25 percent of their volume because of this credit situation," .

With this shut down, workers will receive normal holiday pay for the first two weeks they are out of work and then will get unemployment benefits and supplemental pay from the company for the remaining two weeks.

With the current economic situation, the Bernard Madoff fund investigation and totally uncertain times I don't expect people to be hitting the stores in a major way in the near future.

Good Luck and Good Currency Trading.



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