Thursday, July 31, 2008

Chrysler to trim 1,000 salaried jobs worldwide

This is 3rd round of cuts in 18 months


For the third time in the past 18 months, Chrysler has announced plans to cut its salaried workforce.

Workers were told Wednesday that another 1,000 white-collar jobs worldwide would be eliminated by Sept. 30, following a first half of the year in which Chrysler saw its U.S. sales drop 22%.

The job cuts come on top of more than 27,000 job reductions already announced since February 2007, when the automaker began trying to correct its downward spiral.

Since then, Chrysler has been acquired by a new majority owner, Cerberus Capital Management, and the U.S. auto market has tumbled, sending shock waves throughout the domestic auto industry.

"The signs of economic challenge continue for the U.S. market and as a result, further actions must be taken to improve our business and return to profitability," Nancy Rae, Chrysler executive vice president for human resources and communications, told workers by e-mail.

"In response to the continued deterioration in the U.S. automotive market," she added, "an incremental reduction in both salaried head count and supplemental resources is, unfortunately, necessary."

A Chrysler spokesman confirmed the cuts.

"Chrysler LLC has a clear, long-term strategy to build a profitable enterprise, even in this challenging economy," Rae wrote. "Despite these challenges, the company's liquidity position through the first half of the year remained unchanged versus December 2007 as a result of aggressive programs to reduce working capital, the sale of noncore assets and volume-related manufacturing reductions."

Late last month, Chrysler announced it was shutting down its St. Louis-area minivan plant and reducing a shift at its pickup plant there.

On June 30, Chrysler had 18,500 salaried workers worldwide with 9,500 in the Detroit area, said David Elshoff, a Chrysler spokesman. He couldn't say how Wednesday's announcement would be felt locally.

The Auburn Hills automaker hopes the bulk of cuts will come through voluntary buyouts, early retirements or attrition but cautioned that involuntary layoffs could be considered if goals aren't met.

"The provisions of the special retirement programs, which will be effective Aug. 31, 2008, are consistent with programs announced" in February 2007, Rae wrote.

David Cole, chairman of the Center for Automotive Research, was not surprised by the move, noting the automaker's efforts to partner with other automakers to bring small cars to market.

"The cost of having an overly large organization just doesn't do it anymore," Cole said.

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