2,000 of 13,000 Chrysler job cuts are in Canada and Buzz Hargrove expresses devastation

February 14, 2007
Associated Press and Canadian Press
The president of the Canadian Auto Workers said today that the loss of 2,000 DaimlerChrysler jobs in Canada is “an absolute disaster” for the industry.
Buzz Hargrove bristled at the idea that the cuts could have been worse and said at a press conference that they spell disaster for the Canadian auto industry.
DaimlerChrysler’s restructuring announcement today will see about 13,000 jobs in total eliminated under a plan to reduce the struggling automaker’s costs and return it to profitability.
Two thousand of those jobs are in Canada.
Hargrove said at a press conference that the cuts represent just one more hit from the continued downsizing of DaimlerChrysler.
Hargrove also expressed frustration that he can’t get a meeting with Prime Minister Stephen Harper to discuss the industry’s problems, including what he calls unfair trade practices on the part of offshore auto manufacturers.
The 13,000 jobs will be eliminated over the next three years in a wrenching restructuring that eventually may lead to a DaimlerChrysler divorce.
The Chrysler unit of the German-American automaker (NYSE: DCX (external - login to view)) announced its long-awaited plan at its Auburn Hills headquarters, saying it would cut 16 per cent of the U.S. division’s work force, a move it hoped would return its U.S. operations to profitability by next year.
The plan was announced only hours after Chrysler’s parent, DaimlerChrysler AG, said it was considering “far-reaching strategic options with partners” and that “no option is being excluded” as it reported a 40 per cent drop in companywide profit for the fourth quarter.
The plan calls for closing the company’s Newark, Del., assembly plant, and reducing shifts at plants in Warren, Mich., and St. Louis. A parts distribution center near Cleveland also will be closed.
Under the plan, 11,000 production workers — 9,000 in the U.S. and 2,000 in Canada — will lose their jobs over the next three years, and 2,000 salaried jobs also will be cut — 1,000 this year and 1,000 in 2008.
The job losses are the latest in a yearlong series of devastating cuts in the ailing domestic auto industry, which likely will lose more than 100,000 jobs in all.
“We believe that this represents a solid plan to return to profitability and lay the groundwork for a solid future,” Chrysler CEO Tom LaSorda said at a news conference.
DaimlerChrysler chairman Dieter Zetsche said the company was looking into “further strategic options with partners” for Chrysler.
“In this regard we do not exclude any option in order to find the best solution for both the Chrysler Group and DaimlerChrysler,” Zetsche said in a statement.
Analyst Georg Stuerzer with UniCredit, when asked if the wording in the statement was a sign that the company was mulling a spinoff of Chrysler, said, “the impression was right. This is what people are thinking it could mean.”
He added that the restructuring could be the first step, likely followed by a push by DaimlerChrysler to find a partner with which to operate the Chrysler unit, or even find a suitable buyer for it.
Bank of America auto analyst Ron Tadross said in a note to investors that DaimlerChrysler “did not rule out disposing of its money-losing Chrysler division.”
Tadross said he “would not be surprised if there is good interest in Chrysler. We see Chrysler as a decent business, at least relative to the other U.S. domestic manufacturers.”
DaimlerChrysler said Wednesday that its fourth-quarter earnings plunged on weaker demand at the Chrysler unit, where sales fell seven per cent. DaimlerChrysler’s profit fell to $761 million (all figures U.S.), or 74 cents per share, as revenue slipped to $53.7 billion.
The job cuts at Chrysler will reduce by 400,000 the number of vehicles that operations can produce each year.
The Delaware plant, which makes the slow-selling Dodge Durango and Chrysler Aspen mid-sized sport utility vehicles, employs about 2,100 workers. Chrysler plans to close it in 2009, with a shift reduction this year.
Dean Almuwalld, who works in painting on the Newark plant’s assembly line and has worked at the plant for 13 years, learned its future from news reports.
“I’ll take a transfer,” the 33-year-old said as he walked into the local United Auto Workers hall. Almuwalld said he has relatives in Detroit. “I’ve got family there, so I’m ready to go.”
The Warren truck plant, with 3,313 hourly employees, makes the Dodge Ram and Dakota pickups, which saw sales decline last year. Chrysler plans to eliminate a shift there this year.
The other plant to lose a shift is the St. Louis South assembly plant, which makes Chrysler and Dodge minivans. It has 2,850 workers and would lose the shift in 2008.
The Cleveland-area parts distribution center would be close sometime this year, Chrysler said.