13,000 Chrysler Workers Losing Jobs
Thursday, February 15th 2007, 5:46 am
By: News On 6
AUBURN HILLS, Mich. (AP) _ The next step for Chrysler in its quest to shed 13,000 workers and shrink its factory capacity is talks with the United Auto Workers union, where relations already are a bit strained.
Chrysler and its German parent, DaimlerChrysler AG, announced the job cuts Wednesday as part of a wrenching restructuring plan that will result in two facilities being closed and others losing shifts as the troubled company tries to shrink itself to reflect lower demand for its products.
The union already has refused to grant Chrysler the same health care concessions that it gave to its domestic competitors, something that the company said puts it at an unfair disadvantage.
The UAW is going over Chrysler's finances to see if such concessions are warranted while at the same time it and the Canadian Auto Workers union try to get buyouts or early retirement packages for the 11,000 production workers who will lose their jobs under the restructuring.
``Over the past six years, DaimlerChrysler has closed or sold 16 facilities and reduced its work force by one-third. We maintain that the company cannot cut its way to profitability,'' UAW President Ron Gettelfinger and Vice President General Holiefield said in a joint statement.
They blamed the problems on unfair U.S. trade policies and said they will hold the company to its commitment to grow the business with new products.
``We will continue to look out for the interests of our members by negotiating an attrition program to lessen the impact of these actions,'' the statement said.
Chrysler Chief Executive Tom LaSorda said any offers to leave would be regional, targeted at plants slated to close or lose shifts. He wouldn't give further details, instead saying that it all had to be worked out with the unions.
But in a conference call with industry analysts, LaSorda said it was imperative that the UAW give Chrysler the same health care deal it gave the competition.
``We need to make sure that we get parity with GM and Ford, and we're prepared to work on that aggressively,'' LaSorda said.
He estimated a deal similar to those of General Motors Corp. and Ford Motor Co. would save the company about $340 million to $350 million a year and reduce its health care liability by $2.5 billion to $3 billion.
LaSorda declined further comment on negotiations with the UAW.
The restructuring plan, labeled the Valentine's Day massacre by workers, also had another mysterious component. Chrysler Group's German parent, DaimlerChrysler AG, said it was looking at all options including partners for the troubled Chrysler, and its chairman wouldn't rule out a possible sale of the U.S. operation.
With Chrysler's job losses, the domestic auto industry has eliminated or proposed cutting 132,000 manufacturing jobs at 64 U.S. plants since May 2005, said Sean McAlinden, chief economist and vice president of research at the nonprofit Center for Automotive Research in Ann Arbor.
The devastation was partially offset by foreign brands expanding U.S. manufacturing operations. During that same period, foreign brands and their suppliers have created 30,000 to 40,000 factory jobs in the U.S. That should rise to 50,000 to 60,000 by 2009, McAlinden said.
Chrysler's restructuring calls for closing the Newark, Del., assembly plant, and reducing shifts at plants in Warren, Mich., and St. Louis. A parts distribution center near Cleveland also will be closed, and reductions could occur at other plants that make components for those facilities.
Under the plan, 9,000 U.S. production workers and 2,000 in Canada will lose their jobs over the next three years, and 2,000 salaried jobs also will be cut by 2008. The plan isn't as drastic as a 2001 restructuring in which 40,000 jobs were cut.
``We believe that this represents a solid plan to return to profitability and lay the groundwork for a solid future,'' LaSorda said.
DaimlerChrysler Chairman Dieter Zetsche, asked repeatedly about a potential sale or partners for Chrysler, refused to comment.
``I cannot and will not go into any further detail about the announcement we made today,'' he said during a news conference.
Jeremy Anwyl, president of the Edmunds.com automotive Web site, said potential Chrysler buyers would be limited because of the price tag. He speculated that the company would be attractive to a Chinese automaker because it has a dealership network that could distribute China-built cars in the U.S. Chrysler Group and China's Chery Automobile Co. late last year agreed on a plan for the Chinese manufacturer to build small cars to be sold worldwide.
Nissan Motor Co. and Renault SA and several private equity groups also could be suitors. Chrysler is strong in products such as minivans and trucks where Nissan is relatively weak, Anwyl said.
But Gerald Meyers, a former auto executive who teaches at the University of Michigan, said DaimlerChrysler's work to develop and integrate common vehicle platforms and components suggest the divorce would be unlikely.
``Once you've scrambled those eggs, it's really murder trying to separate them. I think Zetsche's decided to tough it out and try to make his plan work,'' Meyers said.
Jim Press, who runs Toyota Motor Corp.'s North American operations, said Wednesday the company had no interest in any Chrysler assets, though he noted Toyota would always consider an alliance if it presented a ``win-win'' for both sides. He cited his company's longtime joint manufacturing venture with GM in Fremont, Calif.
Chrysler said Wednesday that its fourth-quarter earnings plunged on weaker demand at the Chrysler unit, where sales fell 7 percent. DaimlerChrysler's profit fell to $761 million.
DaimlerChrysler earned $4.26 billion, or $4.17 per share, in 2006 compared with 2005 earnings of $3.76 billion, or $3.70 per share.
LaSorda said the company expects to lose money again in 2007, but less on an operating basis than in 2006. He also said the company expects to take a $1.3 billion charge this year for restructuring expenses.
The job cuts at Chrysler will reduce by 400,000 the number of vehicles that operations can produce each year.
The Delaware plant, which makes slow-selling Dodge Durango and Chrysler Aspen midsize sport utility vehicles, employs about 2,100 workers. Chrysler plans to close it in 2009, with a shift reduction this year.
Dean Almuwalld, who works in painting on the Newark plant's assembly line and has worked at the plant for 13 years, learned its future from news reports.
``I'll take a transfer,'' the 33-year-old said as he walked into the local United Auto Workers hall. Almuwalld said he has relatives in Detroit. ``I've got family there, so I'm ready to go.''
The Warren truck plant, with 3,313 hourly employees, makes the Dodge Ram and Dakota pickups, which saw sales decline last year. Chrysler plans to eliminate a shift there this year.
The other plant to lose a shift in 2008 is the 2,850-worker St. Louis South assembly plant, which makes Chrysler and Dodge minivans.
The Cleveland parts distribution center, which employs 95, will close sometime this year, Chrysler said.
LaSorda said after the plant cuts, Chrysler will be using 100 percent of its factory capacity going into 2008.
He also said the company will double production of four-cylinder engines at its new Dundee, Mich., plant, and it also plans to build a new V-6 engine at a location to be announced later.
DaimlerChrysler shares rose $5.33, or 8.3 percent, to close at $69.78 on the New York Stock Exchange.