Thursday, November 1, 2007

Chrysler cuts four models, five shifts

Chrysler CEO Bob Nardelli

Up to 10,000 hourly jobs and 1,000 salaried jobs being cut; overtime eliminated

Bradford Wernle
Automotive News
November 1, 2007 - 10:20 am ET
UPDATED: 11/1/07 12:35 p.m. EDT

Dodge Challenger coupe
DETROIT -- Chrysler LLC, ending days of speculation, said today it will slash 8,500 to 10,000 hourly jobs before the end of 2008 and cut four vehicles from its lineup as it restructures under the ownership of Cerberus Capital Management LP.

Another 1,000 salaried jobs also are being cut, along with about 37 percent of its contract workers, the company said. Chrysler also will eliminate hourly and salaried overtime.

The cuts in the hourly workforce would equal about 17.5 percent of the company's 57,000 union employees in the U.S. and Canada.

Chrysler will drop shifts at Belvidere (Ill.) Assembly, Jefferson North in Detroit, Toledo (Ohio) North, Brampton (Ontario) Assembly, Sterling Heights (Mich.) Assembly and Mack Avenue Engine Plant II in Detroit. Three of the five plants will eliminate a third shift: Belvidere, Toledo and Brampton.

Chrysler will cut the Dodge Magnum, the Chrysler PT Cruiser convertible, the Chrysler Pacifica crossover and the Chrysler Crossfire convertible.

In the same time frame, Chrysler said it will add two products: the Dodge Journey crossover and Dodge Challenger coupe. It also will add two hybrid SUVs, the Chrysler Aspen and Dodge Durango.
Click Here

Dodge Journey crossover
Market has 'changed dramatically'
“The market situation has changed dramatically in the eight months since Chrysler established the Recovery and Transformation Plan as its blueprint,” Chrysler CEO Bob Nardelli said in a statement.

“Annual industry volume (U.S. market) then was running at a 17.2 million clip. Now we expect a seasonally adjusted annual volume for 2007 to be significantly lower and carry over into 2008.”

The announcement comes just days after UAW workers narrowly approved a new four-year contract with Chrysler. The contract passed on the strength of approvals by several suburban Detroit locals, including Sterling Heights.

One UAW source expressed doubt that the Chrysler contract would have passed a rank-and-file vote had the layoff plan been known.

The Toledo plant was not a part of the recently approved contract.

Bruce Baumhower, president of UAW Local 12 in Toledo, said the Chrysler announcements came as a shock.

“They blindsided us on this one,” he said today.

Baumhower acknowledged that sales of the Dodge Nitro sport utility, which is made at Toledo, had been slow.

“The industry is down," he said. "There’s no question. We think we’re going to be able to negotiate things that will soften the impact until we can get some more product in.”

Chrysler said it had committed to spending $15 billion on products, plants and engineering through 2011 as part of the new contract.

About 1,100 jobs will be lost at Chrysler's assembly plant in Brampton, the head of the Canadian Auto Workers union, Buzz Hargrove, said on Thursday.

The Brampton plant has been producing the Chrysler 300, the Dodge Charger, the Dodge Challenger and the Dodge Magnum, and employs about 4,000 people.

The CAW said the cuts amount to a reduction of 13 to 14 percent of Chrysler's Canadian work force of about 9,000 employees.

The latest job cuts are in addition to 13,000 hourly and salaried jobs already eliminated when then-Chrysler CEO Tom LaSorda announced the Recovery and Transformation Plan on Feb. 14. That was the same day DaimlerChrysler Chairman Dieter Zetsche announced Chrysler was for sale.

Chrysler lost $1.47 billion in 2006, when it was still a unit of DaimlerChrysler.

Chrysler assembles the Dodge Magnum at Brampton; the Pacifica at Windsor, Ontario; and the PT Cruiser convertible in Toluca, Mexico. The Crossfire sports car is assembled in Germany.

David Barkholz contributed to this report

PRESS RELEASE: Chrysler Announces New Plans to Balance Supply and Demand
  • Industry-wide volume reduction and sales slow down requires plant adjustments.

  • Four products will be cancelled from Chrysler line-up; while adding two all-new products and two hybrid models.

Chrysler LLC today announced that it would make volume-related reductions at several of its North American assembly and powertrain plants, and eliminate four products from its line-up.

Shifts will be eliminated at five North American assembly plants which, combined with other volume-related manufacturing actions, will lead to a reduction of 8,500-10,000 additional hourly jobs through 2008.

Additional actions include reductions of salaried employment by 1,000 and supplemental (contract) employment by 37 percent. The Company also plans to eliminate hourly and salaried overtime and reduce purchased services due to reduction in volume.

The volume-related actions are in addition to 13,000 jobs eliminated by the three-year Recovery and Transformation Plan (RTP) announced in February. The objectives of the RTP remain the same.

"The market situation has changed dramatically in the eight months since Chrysler established the Recovery and Transformation Plan as its blueprint," said Bob Nardelli, Chairman and Chief Executive Officer. "Annual industry volume (U.S. market) then was running at a 17.2 million clip. Now, we expect a seasonally adjusted annual volume for 2007 to be significantly lower and carry over into 2008."

"We have to move now to adjust the way our company looks and acts to reflect a smaller market," added Tom LaSorda, Vice Chairman and President. "That means a cost base that is right-sized and an appropriate level of plant utilization."

LaSorda added that third-shift operations at assembly plants usually reflect a high demand after a product is launched. Three of the five plants affected by this action are the result of elimination of third shifts" in Belvidere, Illinois; Toledo, Ohio, and Brampton, Ontario.

In contract negotiations just concluded with the United Auto Workers, Chrysler committed to spending more than $15 billion on products, plants and engineering during the life of the contract through 2011.

The company announced that it will eliminate four models through 2008, including Dodge Magnum, the convertible version (only) of Chrysler PT Cruiser, Chrysler Pacifica and Chrysler Crossfire. In the same time frame, Chrysler will add two all-new products to its portfolio: the Dodge Journey and Dodge Challenger, along with two new hybrid models, the Chrysler Aspen and Dodge Durango.

"These actions reflect our new customer-driven philosophy and allow us to focus our resources on new, more profitable and appealing products," added Jim Press, Vice Chairman and President. "Further, these product actions are all in response to dealer requests."

Manufacturing Actions

Chrysler will eliminate shifts at five assembly plants, and take further volume-related actions at several other facilities. It will:

Drop third-shift operations at Belvidere (Ill.) Assembly Plant in the first quarter 2008. Belvidere builds the Dodge Caliber, Jeep Patriot and Jeep Compass.

Drop second-shift operations at its Jefferson North (Detroit, Mich.) Assembly Plant in the first quarter 2008. It's expected that the plant will return to two shifts in first quarter 2010 with the introduction of the next generation of sport-utility vehicles. The addition of a third shift will remain an option, depending on market demand. Jefferson North builds the Jeep® Grand Cherokee and Jeep Commander.

Drop third-shift operations at the Toledo (Ohio) North Assembly Plant in the first quarter 2008. Toledo North builds the Jeep Liberty and Dodge Nitro.

Drop third-shift operations at Brampton (Ontario) Assembly Plant in first quarter 2008. Brampton will build the Chrysler 300, Dodge Charger and Dodge Challenger. The Dodge Magnum will be discontinued.

Drop second shift operations at Sterling Heights (Mich.) Assembly Plant in first quarter 2008. Sterling Heights builds the Dodge Avenger and Chrysler Sebring sedans and Chrysler Sebring Convertible.

In addition, Mack Avenue (Detroit) Engine Plant II will return to a traditional two-shift / two-crew operation in the first quarter 2008 after operating on a three-crew, two-shift, 120-hour-per-week (3/2/120) schedule. Mack II builds the 3.7-liter V-6 engine.

"I'm confident that we have the right team in place and a business plan that doesn't need to be re-written," concluded Nardelli. "Like all good plans, the RTP has built-in flexibility that allows us to stay one step ahead of market change. And that is the way to long-term sustained profitability."

For more information, go to the Chrysler media site at

No comments: