Chrysler to close factory, cut shift at another

updated 3:53 p.m. ET Oct. 23, 2008

DETROIT - Chrysler LLC will cut 1,825 jobs by eliminating one shift at a Toledo Jeep plant and accelerating the closure of its sport utility vehicle factory in Newark, Del., because of the slowing global economy and a shift toward smaller vehicles.

About 825 workers at the Toledo North Assembly Plant will be laid off indefinitely as of Dec. 31. The Newark closure also will be effective at the end of the year and affect about 1,000 jobs, the company said Thursday in a news release.

The cuts are about 6 percent of Chrysler’s U.S. hourly work force of 33,000.

The Toledo factory makes the Dodge Nitro and Jeep Liberty. Both have been selling slowly this year due to high gas prices and a slowing U.S. economy.

The Newark plant makes the slow-selling Dodge Durango and Chrysler Aspen sport utility vehicles. It originally was expected to close at the end of 2009.

Auburn Hills, Mich.-based Chrysler said in a statement that the changes will adjust inventory to better match consumer demand. Through the first nine months of the year, the company’s U.S. sales have fallen 25 percent from the same period last year, the largest decline of any major automaker.

Daimler AG’s books show that Chrysler lost about $772.5 million in the second quarter as sales slumped and the U.S. market shifted away from its truck-heavy model lineup to more fuel-efficient vehicles.

Daimler included a $154.5 million operating loss for its 19.9 percent share of privately held Chrysler in its third-quarter earnings released by the German automaker Thursday. Figures for Chrysler are delayed one quarter.

Chrysler issued a statement saying that the second-quarter loss is $660 million when taking into account the differences between international and U.S. accounting standards. The Auburn Hills-based company says Chrysler’s automotive operations lost $570 million, with the rest of the loss attributable to Chrysler Financial.

“The markets are facing unprecedented turmoil and we are in a time of historic change in the auto industry,” said, Frank Ewasyshyn, Chrysler’s executive vice president of manufacturing. “These tough, but necessary steps are vital to our long-term viability.”

The privately held company said it would work with the United Auto Workers union to handle the layoffs in a “socially responsible manner.”

The company in the past has offered buyout and early retirement programs to workers affected by plant slowdowns and closures.

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