Chrysler is shutting down for a month...

[K Frame]

Just announced.

No word on how this is going to affect pay for workers.

DETROIT (Reuters) – Citing a credit crisis and dwindling sales, Chrysler LLC on Wednesday said it will shut down all of its manufacturing operations, starting December 19, for at least a month.

Chrysler made the announcement in a letter sent Wednesday to its employees, suppliers and the United Auto Workers union that was also posted on its website.

The blanket shutdown will come as Chrysler and its larger rival, General Motors Corp, both seek to shore up cash as they seek a federal bailout they say they need to survive.

[Nick1911]

If they continue to pay the employee's, I'll laugh like mad.  It'd be like they are trying to tell everyone to take a months payed vacation to find a new job...

[K Frame]

Even if they did keep paying the employees (and, given the contracts, I can't see how they won't be paying the employees) they'd still save large amounts of money by shuttering operations.

[Marnoot]

I wish my employer would pay us for a month for no work! As it is, they just suspended 401K matching indefinitely and announced there will be no bonuses or raises. Those who worked here prior to 2005 had their pension plans frozen.

[Perd Hapley]

If they continue to pay the employee's, I'll laugh like mad.  It'd be like they are trying to tell everyone to take a months payed vacation to find a new job...

Even then, a lot of them wouldn't do it.  When I started working for the mall in 2006, we had a huge store space rented out to the UAW.  Ford closed a plant, and the employees were required to show up at this empty store space every morning, and stay till the afternoon.  And stay they did.  All day long.  For a year or two, at least.  Some walked around the mall for exercise.  Some had little televisions they watched all day.  Some read books, or played cards. 

I'm sure some of them used that time to take online courses, or look for new jobs, or study for night classes they were taking, maybe.  But still, it was amazing that they would come in and do nothing, and earn their 50 billion dollars an hour. 

[Standing Wolf]

Now, if only we could get the federal government to shut down for a month!

[lupinus]

That sucks for the employees.

We have a Bosch plant near me (forget exactly, O2 sensors I have heard is what they actually make)  All employees were just given the option of six months unpaid leave or a severance package that pretty well sucks.  No guarantee that the job will be there in six months.  They will maintain a skeleton crew as I understand it though.

[Josh Aston]

Now, if only we could get the federal government to shut down for a month!

Best idea ever.

Too bad for the employees.

Guess I won't be getting that Challenger any time soon.

[sumpnz]

The only pay employees will be likely to receive will be vacation time they've accrued and possibly holiday pay for Christmas and the New Year. 

Labor is usually the single biggest expense in manufacturing.  If Chrysler is trying to conserve cash it would be idiotic for them to pay the employees anything more than what's described above.

[MGshaggy]

Lets not forget who owns Chrysler - a private equity firm (Cerberus Capital Management).  They picked up Chrysler at such a bargain basement price it was almost a freebie because Chrylser was already in trouble when Cerberus picked it up from Daimler.  Cerberus paid about $7.5bn for an 80% stake in Chrysler, and IIRC some of the post-deal analysis showed that the financing arm of Chrysler was worth that much alone (Daimler paid something along the lines of $35bn for Chrysler just a few years earlier).  

Cerberus is definitely bleeding from the financial crisis, but it still has substantial means to inject a few billion into Chrysler to keep it running.  Seems they're waiting for taxpayer dollars instead.  So now we have to bailout a private equity firm when its so afraid of Chrysler failing it won't put any more of its own money into keeping its investment in Chrysler afloat?

[Marvin Dao]

The only pay employees will be likely to receive will be vacation time they've accrued and possibly holiday pay for Christmas and the New Year.

Labor is usually the single biggest expense in manufacturing.  If Chrysler is trying to conserve cash it would be idiotic for them to pay the employees anything more than what's described above.

The labor agreement has them receiving state unemployment benefits plus supplemental pay from Chrysler. Totals I've seen amount to ~ 95% normal pay. Contracts and all that jazz.

Since Chrysler had 4 months (and growing) worth of product in the pipeline, the production stoppage will eat into some of that oversupply and help to conserve their dwindling cash pile. The expense of building cars they can't sell is much worse than paying union workers to do nothing.