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Chrysler temporarily settles supplier dispute

Chrysler and struggling parts supplier Plastech Engineered Products have agreed for Plastech to resume sending parts to the automaker, temporarily halting a financial dispute.
/ Source: The Associated Press

Chrysler LLC and struggling parts supplier Plastech Engineered Products Inc. have agreed for Plastech to resume sending parts to the automaker, temporarily halting a financial dispute that had closed four assembly plants.

The deal announced Tuesday in U.S. Bankruptcy Court in Detroit means that Plastech was to start making the interior and exterior parts on its second shift Tuesday afternoon, allowing Chrysler to restart production at the factories.

The four plants, as well as one shift at a fifth, were shut down Monday due to a lack of door panels and other interior and exterior parts from Plastech, which has filed for bankruptcy protection.

Chrysler said in a statement that its factories will go back on-line starting with Tuesday's second shift. About 10,500 workers had been idled by the dispute, which had threatened to spread to all 14 of the automaker's assembly plants.

The agreement will last until Feb. 15, with several other bankruptcy hearings scheduled between now and then.

But it doesn't settle the broader dispute, which boiled over in the courtroom Thursday when a lawyer for a group of creditors accused Chrysler of causing the bankruptcy. A Chrysler lawyer denied the accusation.

Plastech, which supplies Chrysler with about 500 plastic interior, exterior and powertrain components for nearly all of its vehicles, filed for 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 (euro136 million). Plastech does about $1.3 billion (euro890 million) in total business, including contracts to supply General Motors Corp. and Ford Motor Co.

Ford and GM said their parts supplies had not been interrupted.