With Chrysler already suffering financially the news could not have come at a worse time.
About 80 workers occupied a Canadian parts plant Tuesday in an effort to prevent Chrysler from removing its tooling. The workers say they want to receive termination and severance pay from the supplier, Aradco Management ULC, which makes engine mounts and other metal components for Chrysler.
Chrysler supplies Aradco with 99 per cent of all its work.
Chrysler spokesman Dave Elshoff said that if the standoff is not resolved by the end of this week, it could severely threaten vehicle production.
"There's an illegal blockade keeping Chrysler from picking up its parts and tooling," Elshoff said. "We'd like to take our tools and re-source the business with a viable supplier partner."
Chrysler and Aradco's US parent company, Catalina Precision Products, disagree over who owes whom money.
Elshoff said Aradco owes Chrysler money for steel it had purchased.
But Dave Domzal, a lawyer representing Catalina Precision Products, said that Chrysler owes about $2 million to Aradco.
Domzal went on to say that Aradco and Catalina were in discussions with Chrysler earlier this week when the automaker abruptly terminated its contracts. The next day in Toronto, Chrysler obtained a court order allowing it to move its tools to another company.
"Chrysler was basically telling them they were putting them out of business," Domzal said.
Chrysler attempted to end the blockade when it offered $205,000 to about 80 workers. But workers rejected the offer, claiming they are owed more.
Police officers had gathered outside the plant, but workers prevented them from entering. A rally was scheduled for today outside the Aradco factory.