Chrysler turnaround plan reported nearCEO LaSorda presents outline to board calling for job cuts and closure of two plants; could be revealed in February.NEW YORK (CNNMoney.com) -- Chrysler Group CEO Tom LaSorda presented the broad outlines of a turnaround plan for the automaker to the board of parent DaimlerChrysler and will unveil the plan in mid-February, according to a published report. The Detroit News reports that the plan is likely to include job cuts and the closure of at least two U.S. factories, including an under-utilized assembly plant in Newark, Del., which makes sport-utility vehicles. That plant has about 2,000 jobs on two shifts. Autos
Chrysler is trying to cut costs by $1,000 a vehicle, according to the report. The automaker saw U.S. sales increase 4.5 percent in 2005, while General Motors (Charts) and Ford Motor (Charts) saw sales slide. And it was profitable in 2005 and the first half of 2006 as GM and Ford lost money on their core North American auto operations. But while DaimlerChrysler (Charts) remains profitable, Chrysler saw sales fall this year, as demand for the pickups and SUVs that make up the majority of sales slid in the face of higher fuel prices. After seeing sharply lower profits the first half of the year, it reported a bigger than expected loss of €1.2 billion in the third quarter, or $1.5 billion, and it warned that losses would continue into the fourth quarter as it cut production of some of its light trucks. It has lost this year its long-held position as the No. 3 U.S. automaker to Toyota Motor (Charts), which now has 15.3 percent of the market here for the first 11 months of the year, compared to 14.4 percent for DaimlerChrysler. Chrysler has yet to win some of the healthcare cost savings from the United Auto Workers union that GM and Ford have won, nor has it offered severance and retirement packages to slash hourly staff, as GM and Ford have done. The paper reports that UAW President Ron Gettelfinger, who sits on DaimlerChrysler's supervisory board, has softened his position against granting those cost savings and that negotiations have started. DaimlerChrysler has come under renewed pressure from German investors to ditch Chrysler, just as rival BMW AG unloaded its money-losing British subsidiary Rover in 2000, according to the News report. The paper reports the plans could be revealed at a news conference set to be held at Chrysler's headquarters in Auburn Hills on Feb. 14 to report companywide annual results, the first time that the earnings announcement has been held there since the 1998 merger of Chrysler and DaimlerBenz created the company. |
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