Chrysler Exec: We May Need New Capacity For New Models

BERLIN January 22, 2003; The AP reports that the Chrysler Group of DaimlerChrysler AG may soon need extra factory capacity as it launches new models as part of a turnaround drive, its chief operating officer said in remarks released Tuesday.

DaimlerChrysler chief executive Juergen Schrempp launched the rescue plan for Chrysler in 2001, announcing that 26,000 jobs, or about one-fifth of its work force, would be cut and six plants shut down over three years.

Chrysler executives say the restructuring effort is ahead of schedule, while warning that competition in the U.S. market will remain tough in 2003.

"We don't have to close any more plants, but actually need more capacity in some places for the new models," COO Wolfgang Bernhard told the Automobilwoche trade newspaper, without giving further details.

Chrysler's plants are currently running at 90 to 95 percent of full capacity, he said.

Chrysler division chief executive Dieter Zetsche said last month the U.S. arm will break even this year, even including restructuring costs. Chrysler had been aiming to move out of the red in 2002 only when those charges were excluded.

In the interview, Bernhard said operating profit also would come in ahead of the company's $1 billion target. It was unclear whether that figure excluded restructuring costs.

Bernhard said Chrysler aimed to double operating profit this year.

"We're sticking with that despite the difficult situation," he was quoted as saying.

Chrysler has been able to reduce costs, but efforts to lift sales and profit margins with new models have been hampered by fierce price competition with Ford Motor Co. and General Motors Corp.

DaimlerChrysler declined to give details ahead of its earnings announcement next month.