Chrysler to cut 1 out of 4 white-collar jobs

About 5,000 workers will be asked to leave the company by the end of the year.

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By Peter Valdes-Dapena, senior writer

Chrysler headquarters in Auburn Hills, Mich.

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NEW YORK ( -- Chrysler LLC plans to reduce its white-collar workforce by 25% by the end of the year, the company said in an announcement Friday.

The cuts, about 5,000 workers in total, will come from Chrysler's salaried and supplemental workforce. Chrysler has about 18,500 white-collar workers.

Salaried workers, which will will make up a majority of the job cuts, will be offered buyouts and early retirement packages, said Chrysler spokesman David Elshoff. Supplemental workers, employees of outside contractors who work at Chrysler, will not be offered packages, he said, but those workers make up only a small number of the cuts.

Details of the offers will be explained to employees over the course of the next two weeks and employees will have until the end of November to decide if they wish to accept the offer.

If not enough employees accept the offers, the company will begin involuntary layoffs through December.

The company did not say how much money it expects to save through this program.

"As we re-size the company to reflect declines in volume, we know we must find new and more efficient ways to conduct our business operations, ," said Chrysler CEO Bob Nardelli in an e-mail sent to Chrysler employees."We recognize that in order to strengthen our competitive capability, and reduce the time and cost to achieve our objectives, we cannot operate as we have in the past."

These latest job cuts will affect only white-collar, non-union workers.

The company announced Thursday that it would eliminate one shift at a Toledo, Ohio, Jeep plant and accelerate the closing of its SUV factory in Newark, Del. Those moves will reduce Chrysler's payroll by about 1,825 jobs.

The Newark plant had originally been scheduled to close by the end of 2009. It is the only factory building the Dodge Durango and Chrysler Aspen full-size SUVs.

In Friday's job-cut announcement, the company also said it would make other cost cutting moves in the near future.

Chrysler, which is privately owned by Cerberus Capital Management, has reportedly been in talks with General Motors (GM, Fortune 500) about a possible buyout or merger. The company has also reportedly been in talks with Nissan (NSANY) and Renault about joining their cross-ownership alliance.

Sales of new cars have plunged this year in the face of a declining economy and tightening credit markets. In September, American consumers purchased fewer than 1 million new cars in a month for the first time in 15 years.

Last month, Chrysler's sales were down by 33% compared to the same month a year earlier, a bigger drop than either Ford or GM experienced. This month is expected to be even worse, according to analysts at the automotive Web site They expect Chrysler's October sales to be down more than 40%.

The overall United States auto market is expected to decline even further next year, according to market analysts at J.D. Power & Associates. To top of page

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