Chrysler to cut up to 12,000 jobs

updated 11:55 a.m. ET Nov. 1, 2007

DETROIT - Chrysler LLC said Thursday it plans to cut up to 12,000 jobs, or up to 15 percent of its workforce, as part of an effort to slash costs and match slowing demand for some vehicles.

The automaker will cut 8,500 to 10,000 hourly jobs and 2,100 salaried jobs through 2008. The company already had begun cutting 1,100 temporary workers Wednesday. It will eliminate shifts at five North American assembly plants and cut four vehicle models from its lineup.

The cuts come in addition to the 13,000 layoffs Chrysler announced in February as part of a massive restructuring plan. Those cuts included 11,000 production jobs and 2,000 salaried jobs. The new round of cuts was expected to involve buyouts or early retirement packages similar to those made in February.

Chrysler officials said falling demand for vehicles in the U.S. market made the cuts necessary. Chrysler’s sales were down 3 percent in the first nine months of this year, according to Autodata Corp., and the company said it expects sluggish sales to continue in 2008.

“The market situation has changed dramatically in the eight months since Chrysler established the Recovery and Transformation Plan as its blueprint,” Bob Nardelli, Chrysler’s chairman and chief executive, said in a statement.

As part of the new plan, shifts will be cut at vehicle assembly plants in Belvidere, Ill.; Toledo, Ohio; Brampton, Ontario; Jefferson North in Detroit and a plant in Sterling Heights. Also, jobs will be cut at the company’s Mack Avenue engine plant.

The announcement comes less than a week after Chrysler workers represented by the United Auto Workers union ratified a four-year contract with the automaker. The agreement passed by a slim margin after a six-hour strike. The Belvidere plant and Jefferson North were among the plants that voted against the agreement, while the Sterling Heights plant voted for it. All of the plants except the Toledo plant are covered by the contract, which promised $15 billion in investment at U.S. plants through 2011.

Chrysler became a private company in August when DaimlerChrysler AG, now called Daimler AG, sold 80.1 percent of Chrysler to the private equity firm Cerberus Capital Management LP. Nardelli said earlier this week that the company is focused on amassing cash for its turnaround effort.

The company announced it will eliminate four auto models through 2008, including the Dodge Magnum wagon, the convertible version of the Chrysler PT Cruiser, the Chrysler Pacifica crossover and the Chrysler Crossfire sports car.

In the same time frame, Chrysler plans to add the Dodge Journey crossover and Dodge Challenger sports car, along with two new hybrid models, 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,” Jim Press, Chrysler’s new vice chairman and president, said in a statement. “These product actions are all in response to dealer requests.”

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