Chrysler to cut 13,000 jobs
02-14-07, 08:25 AM
#1
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Thread Starter
Chrysler to cut 13,000 jobs
Troubled unit of DaimlerChrysler expects to cut 11,000 factory workers, 2,000 salaried jobs and close one assembly line after losses soar.
By Chris Isidore, CNNMoney.com senior writer
February 14 2007: 11:07 AM EST
NEW YORK (CNNMoney.com) -- Chrysler Group, whose year-long slump has dragged it down to fourth place among U.S. automakers, announced plans Wednesday to cut 13,000 jobs through 2009 as it attempts to stem widening losses.
The cuts represent 16 percent of the staff at the North American unit of DaimlerChrysler (Charts), as it eliminates 9,000 U.S. factory workers and another 2,000 factory workers in Canada over the next three years. In addition, 2,000 salaried staff cuts will be spread over the next two years.
The company also said it will close the SUV Assembly line in Newark, Del., by 2009, after eliminating one of its two shifts later this year. It also plans to eliminate a shift at the Warren, Mich., truck plant later this year and a shift at the St. Louis South assembly plant in 2008.
In addition, the company will close a parts distribution center in Cleveland this December, and it will adjust powertrain, stamping and component operations to reflect reduced capacity. It also will look at outsourcing some of what it referred to as non-core operations.
The factory closings and downsizings will reduce the company's capacity by about 400,000 vehicles a year.
Chrysler CEO Tom LaSorda told reporters Wednesday that the turnaround plan should allow the Chrysler division to return to profitability in 2008.
That's quicker than rival Ford Motor, which has said it doesn't expect to return to profitability until 2009. GM has yet to say when it expects its core North American auto operations to again be in the black.
LaSorda said that about half the hourly job cuts planned over the next three years will take place by the end of 2007.
The company did not detail how the job cuts will be made. The union-represented workers have job guarantees that pay them nearly full salary if they are laid off, but those guarantees only run until the end of the current labor contract in September.
GM and Ford made even deeper cuts in their salaried staff by offering a series of buyout and retirement packages worth up to $140,000 per employee, and both got more than 30,000 employees, represented by the United Auto Workers union, to leave the company under those offers.
But Chrysler's announcement did not include a similar offer, although it said "special retirement programs and other termination and attrition programs will be announced separately."
LaSorda said the company is making a "$3 billion powertrain offensive" to develop more fuel efficient cars. And the Chrysler Group must move away from its traditional emphasis on the North American market and on light trucks such as pickups, minivans and SUVs.
"Those two factors were advantages for Chrysler Group once upon a time," said LaSorda, "but the rules of the global marketplace have changed. High fuel prices and other dramatic shifts in the market have driven a shift in consumer preferences to smaller, more fuel-efficient vehicles."
Tough year for auto CEOs
Among the changes he promised was the introduction of the company's first hybrid vehicle in 2008, when it offers a Dodge Durango SUV with both a gas engine and electric motor to improve mileage, as well as more diesel offerings.
LaSorda promised more than 20 all-new vehicles and 13 refreshed vehicles by 2009. But he said the company will also create savings by reducing the number of different engine offerings, cutting the number of V-6 engine families from six to one, for example, and developing a a common axle program for all vehicles.
There have been some calls among German shareholders for DaimlerChrysler to sell the Chrysler unit, undoing the 1998 merger. While that scenario was generally seen as unlikely by many auto experts, there was a report in a German newspaper Wednesday that such a sale is still under consideration.
In response to questions about that report, DaimlerChrysler issued a statement attributed to Chairman Dieter Zetsche that said, "in order to optimize and accelerate the presented plan, we are looking into further strategic options with partners beyond the business cooperation partners mentioned. In this regard, we do not exclude any option in order to find the best solution for both the Chrysler Group and DaimlerChrysler.
"Please understand we can not provide you with any more details at this point in time," he added.
Still, the statement seemed to suggest a change in thinking of DaimlerChrysler management. Zetsche, who had been in charge of the Chrysler unit until last year, previously had been on the record clearly supporting the company retaining its ownership of Chrysler.
Early Wednesday, the company announced that Chrysler's full-year loss was $1.48 billion. In the prior year, as competitors General Motors (Charts) and Ford Motor (Charts) struggled with losses from their auto operations, Chrysler Group posted a $2.02 billion profit for 2005.
Chrysler was hurt by declining sales, particularly in its pickup trucks and SUVs, as the company lost its long-held position as the No. 3 U.S. automaker to fall behind Toyota Motor (Charts) during the year. Honda Motor (Charts) also made gains at the expense of the traditional Big Three Detroit automakers.
Revenue at Chrysler Group fell to $62.2 billion for 2006 from $66.1 billion a year earlier, as the number of vehicles sold also fell 5 percent to 2.7 million.
Still, even with the loss at Chrysler, parent DaimlerChrysler (Charts) posted 2006 operating income of €5.52 billion in 2006, or $7.28 billion, up from €5.19 billion, or $6.84 billion, in 2005. The company saw substantial earnings improvement at the Mercedes Car Group as well as further earnings gains at its truck group and financial services unit.
Net income for the company after a series of special charges came to €3.2 billion, or $4.3 billion, up from €2.8 billion, or $3.8 billion a year earlier. Based on the reported net income, earnings per share amounted to €3.16, or $4.17 a share, up from €2.80 a share, or $3.70, in 2005.
The company said based on the divisions' projections, DaimlerChrysler should achieve a significant increase in profitability in the planning period of 2007 through 2009. But it did not give any specific earnings targets
By Chris Isidore, CNNMoney.com senior writer
February 14 2007: 11:07 AM EST
NEW YORK (CNNMoney.com) -- Chrysler Group, whose year-long slump has dragged it down to fourth place among U.S. automakers, announced plans Wednesday to cut 13,000 jobs through 2009 as it attempts to stem widening losses.
The cuts represent 16 percent of the staff at the North American unit of DaimlerChrysler (Charts), as it eliminates 9,000 U.S. factory workers and another 2,000 factory workers in Canada over the next three years. In addition, 2,000 salaried staff cuts will be spread over the next two years.
The company also said it will close the SUV Assembly line in Newark, Del., by 2009, after eliminating one of its two shifts later this year. It also plans to eliminate a shift at the Warren, Mich., truck plant later this year and a shift at the St. Louis South assembly plant in 2008.
In addition, the company will close a parts distribution center in Cleveland this December, and it will adjust powertrain, stamping and component operations to reflect reduced capacity. It also will look at outsourcing some of what it referred to as non-core operations.
The factory closings and downsizings will reduce the company's capacity by about 400,000 vehicles a year.
Chrysler CEO Tom LaSorda told reporters Wednesday that the turnaround plan should allow the Chrysler division to return to profitability in 2008.
That's quicker than rival Ford Motor, which has said it doesn't expect to return to profitability until 2009. GM has yet to say when it expects its core North American auto operations to again be in the black.
LaSorda said that about half the hourly job cuts planned over the next three years will take place by the end of 2007.
The company did not detail how the job cuts will be made. The union-represented workers have job guarantees that pay them nearly full salary if they are laid off, but those guarantees only run until the end of the current labor contract in September.
GM and Ford made even deeper cuts in their salaried staff by offering a series of buyout and retirement packages worth up to $140,000 per employee, and both got more than 30,000 employees, represented by the United Auto Workers union, to leave the company under those offers.
But Chrysler's announcement did not include a similar offer, although it said "special retirement programs and other termination and attrition programs will be announced separately."
LaSorda said the company is making a "$3 billion powertrain offensive" to develop more fuel efficient cars. And the Chrysler Group must move away from its traditional emphasis on the North American market and on light trucks such as pickups, minivans and SUVs.
"Those two factors were advantages for Chrysler Group once upon a time," said LaSorda, "but the rules of the global marketplace have changed. High fuel prices and other dramatic shifts in the market have driven a shift in consumer preferences to smaller, more fuel-efficient vehicles."
Tough year for auto CEOs
Among the changes he promised was the introduction of the company's first hybrid vehicle in 2008, when it offers a Dodge Durango SUV with both a gas engine and electric motor to improve mileage, as well as more diesel offerings.
LaSorda promised more than 20 all-new vehicles and 13 refreshed vehicles by 2009. But he said the company will also create savings by reducing the number of different engine offerings, cutting the number of V-6 engine families from six to one, for example, and developing a a common axle program for all vehicles.
There have been some calls among German shareholders for DaimlerChrysler to sell the Chrysler unit, undoing the 1998 merger. While that scenario was generally seen as unlikely by many auto experts, there was a report in a German newspaper Wednesday that such a sale is still under consideration.
In response to questions about that report, DaimlerChrysler issued a statement attributed to Chairman Dieter Zetsche that said, "in order to optimize and accelerate the presented plan, we are looking into further strategic options with partners beyond the business cooperation partners mentioned. In this regard, we do not exclude any option in order to find the best solution for both the Chrysler Group and DaimlerChrysler.
"Please understand we can not provide you with any more details at this point in time," he added.
Still, the statement seemed to suggest a change in thinking of DaimlerChrysler management. Zetsche, who had been in charge of the Chrysler unit until last year, previously had been on the record clearly supporting the company retaining its ownership of Chrysler.
Early Wednesday, the company announced that Chrysler's full-year loss was $1.48 billion. In the prior year, as competitors General Motors (Charts) and Ford Motor (Charts) struggled with losses from their auto operations, Chrysler Group posted a $2.02 billion profit for 2005.
Chrysler was hurt by declining sales, particularly in its pickup trucks and SUVs, as the company lost its long-held position as the No. 3 U.S. automaker to fall behind Toyota Motor (Charts) during the year. Honda Motor (Charts) also made gains at the expense of the traditional Big Three Detroit automakers.
Revenue at Chrysler Group fell to $62.2 billion for 2006 from $66.1 billion a year earlier, as the number of vehicles sold also fell 5 percent to 2.7 million.
Still, even with the loss at Chrysler, parent DaimlerChrysler (Charts) posted 2006 operating income of €5.52 billion in 2006, or $7.28 billion, up from €5.19 billion, or $6.84 billion, in 2005. The company saw substantial earnings improvement at the Mercedes Car Group as well as further earnings gains at its truck group and financial services unit.
Net income for the company after a series of special charges came to €3.2 billion, or $4.3 billion, up from €2.8 billion, or $3.8 billion a year earlier. Based on the reported net income, earnings per share amounted to €3.16, or $4.17 a share, up from €2.80 a share, or $3.70, in 2005.
The company said based on the divisions' projections, DaimlerChrysler should achieve a significant increase in profitability in the planning period of 2007 through 2009. But it did not give any specific earnings targets
02-14-07, 01:13 PM
#4
Lexus Fanatic
That is ashame, I know a few people who work at that SUV plant in Newark, Delaware including my neighbor when I lived in Wilmington. That plant was right near University of Delaware, I used to drive by that plant almost daily. That is going to be a pretty big blow to the state with all those workers losing their jobs.
02-14-07, 01:36 PM
#5
Lexus Champion
well if Chrysler and all other automakers would stop making terrible decisions on which vehicles they produce, maybe some of those jobs would be saved!!!
I DO own a Pontiac Vibe - but guess what - the drivetrain is 100% Toyota!!
Its really sad whats become of US automakers, but they've brought all this on themselves.
I DO own a Pontiac Vibe - but guess what - the drivetrain is 100% Toyota!!
Its really sad whats become of US automakers, but they've brought all this on themselves.
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