Suppliers say Chrysler in “chaos” after recent job cuts

The vacuum created when 5,000 white-collar workers left Chrysler last week has created “chaos” within the company, according to a report from Dow Jones News Service. Job cuts long ago eliminated any fat in the organization and the company has been trimming muscle for months. Citing three people familiar with Chrysler’s supply chain, Dow Jones says the automaker is facing challenges in running its day-to-day business.

This has created serious concern among Chrysler’s part suppliers, five of whom are said to be considering putting the company on a COD basis. This could aggravate Chrysler’s cash burn rate and further reduce its dwindling reserves.

The Dow Jones news service, citing three people familiar with Chrysler’s supply chain, said parts makers are “preparing to demand cash upon delivery of parts.”

The problem seems to be more one of perception than reality: Tim Manganello, CEO of drivetrain supplier BorgWarner Inc., told Automotive News that each of the Detroit automakers is paying their bills on time.

“As long as they pay on regular terms, we will continue to conduct business as usual,”’ Manganello wrote in an e-mail. “We are watching all of our global customers regarding payments and have no additional focus on any one OEM versus another.’”

Chrysler spokeswoman MaryBeth Halprin s declined comment on Chrysler’s relationships with suppliers, saying they are confidential, but described any claims of chaos as “unwarranted “.

“There is certainly in this first week without 5,000 employees a transition taking place,” Halprin told Automotive News. “This is an opportunity to continue the transformation of our company, rethink work processes and focus on core function.”