Tech & Science

Chrysler To Cut 26,000 Jobs

Digital Journal Staff

Published

January 29, 2001

DETROIT – DaimlerChrysler announced Monday it will cut 26,000 jobs over three years at its U.S.-based Chrysler division, part of a restructuring designed to pull the automaker out of the red. The cuts amount to about 20 percent of DaimlerChryslers North American work force through a combination of retirements, special programs, layoffs and attrition, with 75 percent of the cuts coming in 2001.

About 2,800 Canadian workers will lose their jobs during the next four months as the auto giant slashes payrolls across North America. Still, many economists believe that Canadas economy, which was primed last year when Ottawa reduced taxes by $66 billion, will not suffer as severely as its southern neighbor in the current round of corporate retrenchment.

The plan also calls for six manufacturing plants to be idled through 2002. Production capability will be reduced by 15 percent. Chrysler said it expects a large part of the job-cutting to be done through retirement programs. Other jobs will be cut through special programs, layoffs and attrition.

These decisions are absolutely necessary to be kept competitive and in fact to survive, Chrysler group president and chief executive Dieter Zetsche said at a news conference. They must be made as soon as possible to take control of costs and end uncertainty that many people are feeling.

Chrysler said the job cuts will involve 19,000 hourly workers and 6,800 salaried employees. U.S. workers covered by the United Auto Workers union will receive 95 percent of their regular pay.

Company officials would not comment on how much the automaker will save as a result of the job cuts. Zetsche said Chrysler will unveil its complete plan to turn around the loss-making division on Feb. 26. However, analysts were not impressed. Analysts and fund managers said job cuts were necessary to return the unit to profitability but would not alone be a panacea for Chrysler.

DaimlerChrysler’s announcement that it plans to eliminate 26,000 jobs, or 20 percent of its North American work force, was the biggest in a wave of layoffs announced in recent weeks in the USA.

Chryslers performance hasnt met Stuttgart-based DaimlerChryslers expectations, with sales incentives erasing profits and production of the hot new PT Cruiser falling short of demand. Daimler and Chrysler also have been reluctant to share parts to cut costs, which might change with a new emphasis on saving money.

In the long run, what matters most is Chryslers ability to develop and make vehicles that people want to buy, said analyst David Garrity of Dresdner Kleinwort Benson in New York. He said he was encouraged that the company was leaving its product development budget relatively untouched.

It was shortsighted for the company to cut production the most in Mexico and Canada, where costs are lower, while shielding higher-paying jobs in the United States. The Chrysler-UAW national contract contains safeguards against job cuts.

Manufacturing Actions

The Chrysler Group manufacturing actions include the following:

2001

United States

Belvidere (Illinois) will eliminate one shift of operation
Jefferson North (Detroit, Michigan) will eliminate one shift of operation
Toledo II (Ohio) Assembly Plant will eliminate one shift of operation
Newark (Delaware) Assembly Plant will reduce line speed

Canada

Bramalea (Brampton, Ontario) will eliminate one shift of operation
Pillette Road (Windsor, Ontario) will eliminate one shift of operation
Windsor (Ontario) Assembly Plant will reduce line speed

Mexico

Toluca Transmission Plant will close

South America

Cordoba (Argentina) Assembly Plant will close
Campo Largo (Parana, Brazil) Assembly Plant will discontinue production and be idled; an evaluation will be made on any future production possibility at that facility

2002

United States

Engine production will be shifted from the Mound Road (Detroit, Michigan) Engine Plant to Mack I and Mack II (Detroit, Michigan)

Mexico