Chrysler, Plastech reach short-term supply deal

DETROIT (Reuters) - Chrysler LLC has reached an agreement with bankrupt Plastech Engineered Products Inc to provide the auto maker with parts through February 27, extending an interim agreement while the sides await a legal ruling on whether Chrysler can sever its ties with the supplier.

Chrysler has asked a federal bankruptcy judge to allow it to take equipment and business away from Dearborn, Michigan- based Plastech and shift the work and machinery to other suppliers.

A Chrysler supplier for the past 10 years, Plastech supplies about 360 different parts that are used in nearly every vehicle the struggling No. 3 U.S. automaker makes, including the Jeep Wrangler and the Dodge Ram pickup truck.

The dispute between the two companies briefly shuttered five Chrysler plants last week and has been watched with interest by Plastech's creditors and other customers, including General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) and Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz)

Plastech and Chrysler had reached an interim parts supply deal expiring on Friday.

U.S. Bankruptcy Court Judge Phillip Shefferly said this week he would rule on Tuesday on Chrysler's request to pull hundreds of tools used to make plastic-based auto parts for its vehicles from Plastech plants.

At the conclusion of a two-day hearing on Thursday, Shefferly also encouraged the two sides to extend their interim supply agreement while he considered the request.

A Chrysler spokesman confirmed on Friday that had been done.

"Chrysler and Plastech have reached an interim supply agreement that will supply components through February 27," Chrysler spokesman Kevin Frazier said in an email.