Chrysler on Wednesday announced plans to axe four models and reduce shifts and volumes at several North American driveline and vehicle assembly plants.
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Shifts will be eliminated at five North American assembly plants which, combined with other volume-related cuts, will lead to a reduction of 8,500-10,000 additional hourly jobs by the end of 2008.
Chrysler will also axe 1,000 salaried posts and reduce contract employees by 37%. It also plans to eliminate hourly and salaried overtime and reduce purchased services due to reduction in volume.
The cuts are the first to be announced since Chrysler became a private company majority owned by Cerberus Capital Management and are additional to 13,000 jobs eliminated by the three-year recovery and transformation plan (RTP) announced under DaimlerChrysler ownership last February.
“The market situation has changed dramatically in the eight months since Chrysler established the Recovery and Transformation Plan as its blueprint,” said Chrysler chairman and CEO Bob Nardelli.
“Annual industry volume (US market) then was running at a 17.2m clip. Now, we expect a seasonally adjusted annual volume for 2007 to be significantly lower and carry over into 2008.”
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By GlobalDataChrysler will eliminate four models by the end of next year, including the Dodge Magnum (a Chrysler 300 derivative), the convertible version of the Chrysler PT Cruiser, the Chrysler Pacifica crossover and the Chrysler Crossfire roadster. But it will add the Dodge Journey and Challenger to its line-up, along with hybrid versions of 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,” said Jim Press, the vice chairman and president newly recruited from Toyota. “Further, these product actions are all in response to dealer requests.”
Chrysler will drop third-shift operations at Belvidere (Illinois) Assembly Plant in the first quarter of 2008. The plant builds the Dodge Caliber, Jeep Patriot and Jeep Compass.
Second-shift operations will be axed at Jefferson North (Detroit, Michigan) Assembly Plant, also in the first quarter 2008. It’s expected that the plant will return to two shifts in the first quarter of 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 Commander.
Third-shift operations are going at the Toledo (Ohio) North Assembly Plant, again in the first quarter of 2008. The factory builds the Jeep Liberty (Cherokee for export) and Dodge Nitro.
Second shift operations at Sterling Heights (Michigan) assembly plant will end in the first quarter 2008. The plant builds the Dodge Avenger and Chrysler Sebring sedan and convertible.
In addition, Mack Avenue (Detroit) Engine Plant II will return to a traditional two-shift/two-crew operation in the first quarter of next year after operating on a three-crew, two-shift, 120-hour-per-week (3/2/120) schedule. The plant builds the 3.7-liter V6 engine.
In Canada, Chrysler will drop third-shift operations at Brampton (Ontario) Assembly Plant in the first quarter of 2008. Brampton will continue to build the Chrysler 300, Dodge Charger and Challenger and the Magnum will be axed.
“I’m confident that we have the right team in place and a business plan that doesn’t need to be re-written,” added 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.”
