Chrysler Group Announces Next Initiative in Turnaround
Plan
- Workforce reduction of 26,000 -- 20 percent -- over next three years
- Large part of goal expected to be reached through retirement programs;
achieved within the framework of existing union contracts
- Six manufacturing plants to be idled through 2002
- Dieter Zetsche: "To be competitive, the Chrysler Group needs to be a
more nimble company. Along with exciting products, this will establish
a sound basis for future growth."
- Juergen Schrempp: "I have full confidence in the management team under
the leadership of Dieter Zetsche. These measures will substantially
help to turn around the Chrysler Group."
AUBURN HILLS, Mich., Jan. 29 Chrysler Group is today
announcing the next major part of its turnaround plan to regain
competitiveness under difficult business circumstances.
Over the course of the next three years, the Chrysler Group will reduce
its workforce by approximately 20 percent. The reduction will be
approximately the same percentage for both salaried and hourly employees.
This will affect about 26,000 people -- 19,000 hourly and 6,800 salaried
(including 1,800 supplemental employees) -- through a combination of
retirements, special programs, layoffs and attrition.
It is expected that 75 percent of the overall reduction will be achieved
in 2001. This is being done within the framework of existing union contracts.
"Today's actions will help remove the uncertainty many of our employees
have been feeling," said Chrysler Group President and Chief Executive Officer
Dieter Zetsche. "Part of this process may be painful for many people.
However, to be truly competitive in today's auto industry environment, we need
to be a more nimble company, more closely aligned with current and future
market conditions."
Zetsche said: "Only by adapting our overall cost structure, workforce and
production levels to the realities of the marketplace, while maintaining our
investments in exciting products, can we establish a sound basis to ensure the
long-term health of the Chrysler Group for its numerous stakeholders and be in
strong position for future growth."
"We are taking these actions at this time, in order to accelerate
improvement in Chrysler Group's financial performance," said Zetsche. The
full Chrysler turnaround plan will be presented to the public at the
DaimlerChrysler Annual Press Conference on February 26, 2001.
A series of manufacturing actions will be necessary to attain the
objectives, including reducing shifts and line speeds, as well as idling
selected plants to adjust production capacity at Chrysler manufacturing
operations around the world. At this point in time, the company plans to
reduce excess capacity by idling six manufacturing facilities over the next
two years.
The company also will adjust component, stamping and power train volumes
commensurate with the reductions in assembly capacities. Overall, the
workforce reduction proportionately greater in Canada than in the United
States due to the higher number of employees in assembly operations whose
products are impacted.
In addition, all facilities have new targets to accelerate quality levels
and productivity, so that the company can operate more efficiently and at a
much improved cost structure over the mid to long term.
"Especially as we implement these actions, we are fully committed to
ensuring what has always been a key strength at Chrysler -- an exciting and
innovative range of products," said Zetsche. "These initiatives reinforce
that commitment by minimizing our workforce reductions within the product
development organization."
Retirement Programs: 28,620 Employees Eligible
"Given that Chrysler Group has a large number of retirement-eligible
employees, we believe that a large part of our goal can be reached through
voluntary special retirement programs by the end of the first quarter this
year," said Zetsche.
Some 23,700 hourly (U.S.: 21,000; Canada: 2,700) and 4,920 salaried
(U.S.: 4,600; Canada: 320) employees in the U.S. and Canada are eligible for
regular retirement or for one of the special programs. The number of layoffs
necessary to meet the workforce reduction goals in the near term will depend
on participation rates in these programs. As the company manages its way
through this reduction, it will provide retirement planning services to
counsel eligible employees through their transition.
"Our management team has maintained an open and continuous dialogue with
the leadership of the United Auto Workers (UAW) and the Canadian Auto Workers
(CAW), as well as with other employee representatives," said Zetsche. "In
that process of discussion, solutions were found that are in line with the
framework of our current labor contracts."
These actions are a crucial part of the company's latest initiative in its
turnaround plan, following a material cost reduction program that was put in
place at the start of this year.
Manufacturing Actions
The Chrysler Group manufacturing actions include the following:
2001
United States
Belvidere (Illinois) will eliminate one shift of operation
Jefferson North (Detroit, Michigan) will eliminate one shift of operation
Toledo II (Ohio) Assembly Plant will eliminate one shift of operation
Newark (Delaware) Assembly Plant will reduce line speed
Canada
Bramalea (Brampton, Ontario) will eliminate one shift of operation
Pillette Road (Windsor, Ontario) will eliminate one shift of operation
Windsor (Ontario) Assembly Plant will reduce line speed
Mexico
Toluca Transmission Plant will close
South America
Cordoba (Argentina) Assembly Plant will close
Campo Largo (Parana, Brazil) Assembly Plant will discontinue production
and be idled; an evaluation will be made on any future production
possibility at that facility
2002
United States
Engine production will be shifted from the Mound Road (Detroit, Michigan)
Engine Plant to Mack I and Mack II (Detroit, Michigan)
Mexico
Lago Alberto Assembly Plant will shift production to the Saltillo
Assembly Plant
Toluca Engine Plant will close
