DaimlerChrysler Working to Sell Some of Its Parts Plants

DETROIT AP reports that DaimlerChrysler AG' s Chrysler Group is hoping to add momentum to its recovery plan by selling off some of its parts plants.

The automaker's $3.9-billion, three-year turnaround plan does not depend on selling off component operations to cut at least $1.8 billion in manufacturing costs. But with revenue and market share falling short of goals, the automaker is aggressively searching for opportunities to cut costs, The Detroit News reported Sunday.

Shedding the parts factories, which churn out everything from engines and transmissions to windshields and air conditioners, does not come without problems.

Buying rather than making parts would cut overhead costs and capital spending, and potentially save hundreds of dollars on every car and truck Chrysler builds, said Sean McAlinden, labor economist for the Center for Automotive Research in Ann Arbor. But finding buyers is complicated by the economic recession and difficult market conditions in the auto industry.

``There's a lot more speculation out there than companies coming forward expressing an interest,'' said Thomas LaSorda, Chrysler's new manufacturing chief. ``It's a tough market right now.''

Engine plants in Mexico and Detroit are slated to close this year as part of Chrysler's restructuring. It is not clear how many of Chrysler's remaining 25 North American parts plants might be up for sale.

Chrysler Chief Executive Dieter Zetsche has said the automaker will sell a plant only under the right circumstances.

The relationship between the plants and the unions also could be a problem.

The majority of Chrysler's parts plants are represented by the United Auto Workers, which negotiated a ``no close-no sell'' factory clause in the contract. High union wages could also deter buyers, who would have to agree to abide by existing labor agreements.

Any talk of selling or outsourcing work could spark tensions with the UAW, said Dennis Pawley, who was Chrysler's manufacturing chief in the 1990s.