Detroit – DaimlerChrysler AG announced plans this morning to cut 13,000 jobs from 2007 to 2009 as part of a three-year plan to return the carmaker to profitability by next year.
The job reductions, which amount to about 16 percent of the Chrysler Group work force, call for cutting 2,000 salaried employees and 11,000 hourly jobs, 9,000 in the United States and 2,000 in Canada.
The Newark, Del., assembly plant, which makes the Dodge Durango and Chrysler Aspen SUVs, will be idled by 2009 and the Cleveland, Ohio, Parts Distribution Center will be idled in December 2007.
In Michigan, a shift will be eliminated this year at the Warren Truck Plant, which makes the Ram full-size pickup and Dakota compact pickup. In 2008, a shift will be eliminated at the St. Louis South Assembly Plant, which makes minivans.
The plan will reduce total production capacity by 400,000 units per year.
Chrysler said special retirement programs and other termination and attrition programs would be announced separately.
At this time a year ago, the Chrysler Group was posting profits and increasing U.S. market share, but in the past year, the Chrysler Group has had to deal with mounting inventories amid slumping sales.
Chrysler posted an operating loss of $1.5 billion Wednesday, down from an operating profit of $2 billion in 2005.
The company blamed falling sales and the strong dollar for the sharp downturn.
Executives hope for a $4.5 billion financial improvement by 2009 to an operating profit of $3 billion.
Despite the loss by the Chrysler Group, DaimlerChrysler reported a net income of $4.3 billion for 2006, up from $3.8 billion in 2005.
Operating income for the year rose to $7.3 billion, up from $6.8 billion in the previous year. Operating profits at the Mercedes luxury car group came in at $3.2 billion, after a 2005 operating loss of $666 million.
In addition to the job cuts, DaimlerChrysler plans to focus on fuel-efficient products, global growth and partnerships. The company plans to invest $3 billion in powertrain technology that leads to a more fuel-efficient lineup.
The plan is expected to cost Chrysler $1.3 billion, including about $1 billion in cash this year.
Reduced production, in order to get inventory in line with demand, is expected to cost the company about $300 million, as well.
The $3 billion powertrain investment includes a common axle program for all vehicles. Last week, the company said, it signed a nonbinding memorandum of understanding with German-based supplier Getrag to develop a more fuel-efficient “dual clutch” transmission technology.
The restructuring plan will be watched carefully by investors who have been clamoring for the sale of Chrysler. It’s a refrain heard every time the Chrysler Group has struggled since the 1998 merger of Daimler-Benz and Chrysler Corp., which resulted in a sometimes-uneasy relationship between the automaker’s U.S. and German sides.
Chrysler is a much smaller company than when it was acquired by Daimler-Benz. It went through a sweeping turnaround plan in 2001.
Since then, Chrysler Group has eliminated about 40,000 jobs and gotten rid of 16 plants.
General Motors Corp. and Ford Motor Co. last year worked to shed thousands of workers through buyouts. About 38,000 hourly workers at Ford and 34,000 at GM decided to leave their companies.
Chrysler employs about 36,600 people in Michigan, and 25,600 belong to a union.
Analysts believed the Delaware assembly plant was the most vulnerable to closure, mostly because the East Coast plant’s production has fallen to about half the number it is capable of and because it is farther from Midwest suppliers.
