Chrysler has axed 1,200 workers and the third shift at its Windsor assembly plant in Ontario, Canada, as demand for the minivans it makes has fallen.

“Given today’s severe economic environment and continued lack of consumer credit, which has affected the minivan market as well, we cannot sustain a three-shift operation at Windsor as we continue to work towards the appropriate level of plant utilisation,” said Chrysler manufacturing chief Frank Ewasyshyn in a statement.

“We will work closely with the Canadian Auto Workers union to manage the shift reduction in a socially responsible manner.”

Chrysler added that 1,200 employees would “be put on indefinite layoff” and the shift would end “no sooner” than 24 June.

“This volume-related action is another unfortunate but necessary step by Chrysler management to streamline the company and meet commitments made in the viability plan submitted to the U.S. Federal government in February 2009, including reductions in workforce, plant operating shifts and product models,” the company said, adding it was also in talks with the Canadian federal and Ontario provincial governments over assistance for its Canadian operations.

Chrysler has taken out 1.2m units of capacity (over 30%) since 2007 and an additional 100,000 units will go this year, reduced its fixed costs by US$3.1bn; but over 32,000 jobs have also gone with 3,000 more due in 2009. Chrysler will also have eliminated seven models from its product line by the end of the year and reduced fixed costs by an additional $700m, its lowest level since 1994, it said.

Windsor builds the Dodge Grand Caravan and Chrysler Town & County minivans, as well as a derivative of the latter called the Routan for Volkswagen North America.

The plant currently employs 4,450.