Ruling Due Tuesday on Plastech-Chrysler Flap

From Detroit Free Press

DETROIT — A U.S. bankruptcy judge said that he will rule Tuesday afternoon on a dispute between Chrysler LLC and Plastech Engineered Parts Inc., and he encouraged the two sides to reach a second temporary deal to keep Plastech’s parts flowing to Chrysler plants until then.

A temporary deal that has Plastech producing parts for Chrysler expires tonight. The Dearborn, MI, supplier continues to make parts for other customers, such as General Motors Corp. and Ford Motor Co.

At issue is whether Chrysler can seize tools Plastech uses to make parts for its vehicles, after Chrysler canceled its contracts with the supplier of plastic interior, exterior and engine components.

A ruling for Chrysler would allow the automaker to immediately take thousands of molds and dies and move them to other suppliers. That, Plastech says, would send a ripple effect of plant closures and layoffs through the supplier in the next nine to 14 months.

A ruling against Chrysler would keep the automaker from going into Plastech’s plants, at least 18 of them, to seize tools used to make parts for Chrysler vehicles.

Any decision would allow Plastech attorneys to work on the company’s restructuring, which could include selling the business to customer Johnson Controls Inc.

Such talks were taking place before Plastech’s bankruptcy filing on Feb. 1 and are still being contemplated, said Don MacKenzie, a founder of Birmingham, MI-based consulting firm Conway, MacKenzie & Dunleavy, which is working for Plastech.

If Chrysler were allowed to take its tools soon, Plastech would have to shut down eight plants and lay off 1,400 employees, said Mathew DeMars, president of Plastech’s interior and exterior business, during testimony Thursday.

Hardest hit would be Plastech’s plant in Warren, MI, where all of its work is done for Chrysler, and Plastech’s Frenchtown II plant, in Monroe, MI, which relies on Chrysler for 87 percent of its revenue.

A Chrysler consultant said the automaker could remove tools from 18 Plastech plants within a week — most of them in two days, said Arthur Nelson, a consultant at Southfield, MI-based BBK, which Chrysler hired to evaluate Plastech and help with the move.

Richard Schmidt, Chrysler’s senior manager of material supply operations, testified that if the company could access its tools Saturday, it would take four to five days to get other suppliers up and running with those tools.