The auto industry demands too much from automakers. The never-ending fluctuation and crises swarm the industry like mushrooms on a rainy season. And automakers have to act on them swiftly so as to keep going and still be in the game. The Chrysler Group, for one, expects to eliminate about 1,000 white-collar jobs as part of its major restructuring plan. This information was revealed by people familiar with the plan.
The seven percent cut in white-collar ranks will be in addition to over 10,000 hourly jobs that are likely to be eliminated in the top-to-bottom overhaul of the underperforming US unit of the German automaker DaimlerChrysler AG. According to sources, the restructure plan dubbed as "Project X" will be slashing Chrysler's 14,180 US salaried workers, approximately 1,000 positions.
When asked about the secret restructure plan, a Chrysler spokesman declined to comment. However, the said plan is scheduled to be unraveled by Tom LaSorda, Chrysler CEO, this coming Wednesday. "We're not going to comment on that," said Michael Aberlich of Chrysler. "Tom will make the announcement as to what will be included in the restructuring plan on the 14th."
Managers at Chrysler headquarters in Auburn Hills announced that their departmental budgets for 2007 have been recalled in anticipation of the downsizing. "Nearly all of Chrysler's 14,180 U.S. salaried employees work in Auburn Hills and other facilities in Michigan," said David Elshoff of Chrysler. White-collar jobs of the company have been continuously shrinking. Elshoff added Chrysler had nearly 19,000 white-collar workers at the end of 2000.
Chrysler reported a projected $1.2 billion loss last year. This fact is the primary reason for the latest white-collar cuts. Analysts said that in downsizing strategies, salaried workers are often vulnerable because of their paychecks and their lack of protection by union contracts. "The white-collar will go first," said Kenneth Dalto, an independent restructuring consultant in Farmington Hills. "It's what they call low-hanging fruit. You can pick them easy."
Dieter Zetsche, Chrysler's chairman, intends to transform the company into a smaller more-efficient car manufacture that will serve as mighty competitor in the American auto market. "Project X" requires cooperation in vehicle development between Chrysler and Mercedes-Benz. However, the aftermaths of said restructure plan include plant closures, shift elimination and detrimental job cuts.
Unlike General Motors Corp. and Ford Motor Co., Chrysler is not offering buyouts and early retirements to its unionized work force. Instead, the company will be offering retirement incentive packages to hourly workers at select assembly plants and other manufacturing locations in the United States and Canada.
GM and Ford are struggling hard to cope with the auto industry crises. Aside from plant closures and job cuts, the automakers have released a more powerful lineup to circumvent the flow of automotive events. GM style, Chevy brakes, Ford engines, , and the entire lineup of the two auto giants are significantly upgraded to cope in the shortest possible time.
Sources familiar to the plan added that the internal goal is to trim about 10,000 hourly jobs from 60,000 unionized positions of the company, and reduce production capacity to match its dwindling market share. Chrysler intends to offer unionized workers a cash payment of $50,000 or more, plus a voucher that can be put toward the purchase of a Chrysler vehicle.
An analyst said Chrysler's downsizing won't be as dramatic as those at GM and Ford, but still painful. "Ford and GM have been going through some gut-wrenching changes and we don't think that what happens at Chrysler will be nearly as drastic," said David Kudla of Mainstay Capital Management in Grand Blanc. Kudla added, "It won't all happen in one place," he said. "It will be spread across the organization. That's a natural part of the process."
The downsizing is expected to include the cover an assembly plant in Newark, Del., and an engine plant in Detroit. Shift reduction will likely affect the Jefferson North plant in Detroit, a pickup plant in St. Louis, Mo., and assembly plants located in Windsor and Brampton, Ontario.
