April 2 (Bloomberg) -- Chrysler LLC, under a 30-day government deadline to reorganize, shut a second Ontario factory because of a dispute with a maker of transmission parts, crippling plants accounting for a third of U.S. sales.

The parts shortage could ripple through the Auburn Hills, Michigan-based company’s 10 other North American factories unless it’s resolved, said Max Gates, a Chrysler spokesman. The Brampton plant shut today makes Chrysler 300, Dodge Challenger and Charger cars. A Windsor minivan plant was idled yesterday.

Chrysler got a court order today to get production equipment from the parts plant, Gates said

Auto-parts makers are ceasing operations as banks pull financing, said Craig Fitzgerald, a financial consultant at Plante & Moran in Southfield, Michigan. The shutdowns will disrupt the flow of auto components repeatedly in the next 18 months and cut the number of small parts makers, he said.

“You will find a significant increase in temporary supply disruptions,” Fitzgerald said in an interview today. He said he has seen 10 small suppliers halt operations in the past two weeks as banks stopped financing them.

Because auto demand is weak in North America, short production shutdowns won’t hurt Chrysler, Fitzgerald said. The automaker, owned by Cerberus Capital Management LP, already is idling some plants for weeks at a time to hold down inventory.

Court Order

The order Chrysler got from the Ontario Superior Court of Justice calls for the supplier, Transcast Precision Inc., to give the automaker access to tooling and machinery owned by it at the Wallaceburg, Ontario, transmission-parts plant, said Gates, the Chrysler spokesman. The automaker is making “every effort” to locate and remove the equipment, he said.

Chrysler wants to make the transmission parts itself at a plant in Etobicoke, Ontario, he said.

The Wallaceburg plant that had supplied the parts was foreclosed on last week and is now owned by Transcast, the Windsor Star reported. The factory has 60 workers and had been owned by H.E. Vannatter Group, the Star said, citing officials of the union local at the facility.

The new owners stopped shipping parts after taking over, the newspaper reported.

Ken Cadotte, listed as the operations manager of H.E. Vannatter on the company’s Web site, didn’t return a call from Bloomberg News for comment.

GM Lawsuit

General Motors Corp. also bought parts from the Wallaceburg plant and stopped receiving them. The Ontario Superior Court of Justice yesterday ordered Vannatter Group and Transcast to release tooling equipment owned by GM that the supplier refused to relinquish, according to a court filing.

None of GM’s operations have been affected by the lack of parts from the plant, Dan Flores, a spokesman for the Detroit- based automaker, said in an interview.

“We have and will continue to aggressively take the necessary steps that are required to protect our own interests,” he also said, in an e-mailed statement.

The GM case is General Motors Corp. v. Vannatter Group Inc. and Transcast Precision Inc., CV-09-8113-00CL, Ontario Superior Court of Justice.

To contact the reporter on this story: Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net

Last Updated: April 2, 2009 17:08 EDT