Factory shifts, contract workers to be reduced

Bill Vlasic / The Detroit News

Chrysler LLC is expected to slash at least 1,000 salaried workers, cut contract employees and trim manufacturing jobs in an effort to downsize payroll and production to match its shrinking U.S. market share.

People close to the company said Chrysler’s board Tuesday approved the job cuts and possible factory shift reductions in addition to dropping four vehicles from its product lineup.

The cuts are expected to be announced as soon as today as the newly independent automaker revamps its operations under the ownership of the private-equity firm Cerberus Capital Management.

The reductions are in addition to the elimination of 11,000 hourly positions and 2,000 salaried jobs — primarily through buyouts — included in Chrysler’s "recovery and transformation" plan announced earlier this year.

Since that plan was unveiled, Chrysler was sold in August by German automaker Daimler AG to Cerberus.

In the first board meeting since the sale, Chrysler directors led by Chairman Bob Nardelli moved to realign the automaker’s work force and product portfolio.

The job cuts will be extensive but do not amount to a second reorganization on the scale of the recovery and transformation plan, said sources close to the company.

In addition to cutting at least 1,000 salaried positions, Chrysler will eliminate hundreds of white-collar contract employees, the sources said.

The changes in the hourly work force will be tied to reduced vehicle production at some Chrysler assembly plants. The actions could include layoffs and shift reductions at plants building slower-selling models.

People familiar with the situation said Chrysler will kill four vehicles from its lineup: the Dodge Magnum wagon, Chrysler Pacifica crossover, PT Cruiser hatchback and the Chrysler Crossfire roadster.

The mass-market Magnum, Pacifica and PT Cruiser have each seen sales drop about 30 percent this year. The Crossfire is a low-volume niche vehicle developed under Chrysler’s former German leadership team.

A Chrysler spokesman declined to confirm the job cuts or product changes.

DCX expanded lineup

Nardelli said at a public appearance Monday that the automaker is in the process of revamping its operations after the breakup of the nine-year merger of Daimler and Chrysler.

As a division of the combined company known as DaimlerChrysler, Chrysler dramatically expanded its product line with a goal of boosting its U.S. market share.

However, Chrysler struggled last year under the weight of excess inventories of unsold vehicles. Steep losses led to the decision by DaimlerChrysler’s German management to put the Auburn Hills-based automaker up for sale.

"Chrysler has been knocked down, but it’s never been knocked out," Nardelli said at an appearance Monday at the American Magazine Conference in Boca Raton, Fla.

But Nardelli, who was hired as Chrysler’s new CEO in August, said the company may have fallen victim to the syndrome he described as "success breeds arrogance."

"I think we lost our way on a couple of things," he said.

Pressure’s on for Nardelli

Nardelli, a former General Electric executive and Home Depot CEO, is under pressure from Cerberus and its investment bankers to streamline Chrysler’s operations and generate cash.

Because of difficult conditions in the debt market, Cerberus’ investment bankers were forced to take on about $10 billion in debt related to the Chrysler deal.

"The bankers are putting plenty of pressure on Nardelli to turn Chrysler around and do it quickly," said Joseph Phillippi of AutoTrends Consulting in Short Hills, N.J.

Few details were available about the forthcoming job cuts and whether Chrysler will offer buyout packages to affected white-collar workers.

On the manufacturing side, Chrysler is drastically reducing its inventories and sales to rental car fleets.

The company’s overall U.S. sales have fallen by 3 percent this year through the month of September.

People close to the situation said Chrysler will likely cut shifts at some assembly plants to bring production levels in line with slower sales.

Nardelli and his executive team are also making hard decisions on products.

No details were available on how soon the Pacifica, Magnum, PT Cruiser and Crossfire will be phased out.