Major Job Cuts at Chrysler Group - KLTV.com - Tyler, Longview, Jacksonville |ETX News

Major Job Cuts at Chrysler Group

he Chrysler assembly line in Newark, Del., which the company announced Wednesday it intends to close by 2009. he Chrysler assembly line in Newark, Del., which the company announced Wednesday it intends to close by 2009.

 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.

The factory closings and downsizings will reduce the company's capacity by about 400,000 vehicles a year.

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 gurantees 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."

There have been some calls among German shareholders for DaimlerChyrsler to sell the Chrysler unit, undoing the 1998. 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 in which he 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."

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.

The topic was likely to be discussed further at a press conference set to start at 9:30 a.m. ET.

Earlier in the day, 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.

Source: CNN Newsource

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