Chrysler is eliminating the third shift at its minivan assembly plant in Windsor, Ont., and placing 1,200 workers on indefinite layoff, the company said Wednesday.

"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 utilization," Frank Ewasyshyn, executive vice-president of manufacturing, said in a statement.

"We will work closely with the Canadian Auto Workers union to manage the shift reduction in a socially responsible manner," he said.

The company said the layoffs will take effect no sooner than June 24.

A spokesman for CAW Local 444 said Chrysler told the union it would remove the third shift, probably in July and August, if the auto market didn't improve.

The Windsor plant has 4,450 hourly workers who build Dodge Grand Caravan and Chrysler Town & Country minivans.

"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," the company said.

Chrysler has asked the U.S. government for $9 billion US in aid and is also seeking about $2.8 billion from the federal and Ontario governments for its Canadian operations.

Chrysler said it has eliminated more than 1.2 million units of capacity — over 30 per cent — since 2007 and will remove an additional 100,000 vehicles this year. It has cut 32,000 jobs and plans to cut 3,000 more in 2009.

The company added that it "will continue to make adjustments to production schedules at its North American manufacturing operations as dictated by the market."