Chrysler Unit To Slash 13,000 Jobs, Idle Plants

Feb. 14, 2007
Assembly plant in New Jersey and distribution center in Ohio will be idled.

DaimlerChrysler said on Feb. 14 it planned to axe 13,000 jobs at its loss-making Chrysler subsidiary as part of a broad restructuring plan aimed at returning the U.S. unit to profitability by 2009. The cuts represent 16% of the group's current global workforce of 82,500 people and come just six years after another turn around plan eliminated 26,000 jobs and 16 plants. When the layoffs are complete, the Chrysler group will be nearly half the size it was at its peak after it was purchased by Daimler Benz in 1998.

The current plan also calls for the idling of two plants -- an assembly plant in New Jersey and a distribution center in Ohio -- and the elimination of shifts at two others for a total reduction in production capacity of 400,000 units per year.

The bulk of the job losses will affect union workers, with 9,000 hourly jobs eliminated in the U.S. and 2,000 in Canada.

The automaker said it would take a restructuring charge of one billion euros (US$1.3 billion) in 2007 with a net cash impact for the year of about 800 million euros (US$1 billion.)

Chairman Dieter Zetsche said the automaker was examining other options and did not rule out the sale of Chrysler, a move shareholders in Germany have been pressing for. "In order to optimize and accelerate the presented plan, we are looking into further strategic options with partners beyond the business cooperation partners mentioned," he said in a statement.

The announcement came as DaimlerChrysler reported bottom-line net profit of 3.2 billion euros (US$4.2 billion) in 2006, up 14% from the figure a year earlier, thanks largely to the strong performance of its up-market Mercedes-Benz brand and the trucks business. Operating profit grew by 6.4% to 5.52 billion euros.

The Chrysler group was hard-hit by high fuel prices which accelerated a shift away from highly profitable but gasoline guzzling trucks and large sports utility vehicles. Chrysler Group president Tom LaSorda said the unit can no longer rely on its historic strengths in the minivan, truck and sports utility vehicle market and must expand beyond North America which represents some 90% of the group's business. "The Chrysler Group will add a more robust customer and brand focus while continuing to stress product leadership," he said. "In addition, we must achieve better global balance and rely more heavily on leveraging partnerships to manage costs while finding growth opportunities."

Copyright Agence France-Presse, 2007

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