DCX to cut 13,000 jobs

[Dragon]

over the next 3 years.

NEW YORK (CNNMoney.com) -- Chrysler Group, whose year-long slump has dragged it down to fourth place among U.S. automakers, announced plans Wednesday to cut 13,000 jobs through 2009 as it attempts to stem widening losses.

The cuts represent 16 percent of the staff at the North American unit of DaimlerChrysler (Charts), as it eliminates 9,000 U.S. factory workers and another 2,000 factory workers in Canada over the next three years.

The Chrysler assembly line in Newark, Del., which the company announced Wednesday it intends to close by 2009.

The Chrysler assembly line in Newark, Del., which the company announced Wednesday it intends to close by 2009.

In addition, 2,000 salaried staff cuts will be spread over the next two years.

The company also said it will close the SUV Assembly line in Newark, Del., by 2009, after eliminating one of its two shifts later this year. It also plans to eliminate a shift at the Warren, Mich., truck plant later this year and a shift at the St. Louis South assembly plant in 2008.

The factory closings and downsizings will reduce the company's capacity by about 400,000 vehicles a year.

The company did not detail how the job cuts will be made. The union-represented workers have job guarantees that pay them nearly full salary if they are laid off, but those gurantees only run until the end of the current labor contract in September.

GM and Ford made even deeper cuts in their salaried staff by offering a series of buyout and retirement packages worth up to $140,000 per employee, and both got more than 30,000 employees represented by the United Auto Workers union to leave the company under those offers.

But Chrysler's announcement did not include a similar offer, although it said "special retirement programs and other termination and attrition programs will be announced separately."

There have been some calls among German shareholders for DaimlerChyrsler to sell the Chrysler unit, undoing the 1998. While that scenario was generally seen as unlikely by many auto experts, there was a report in a German newspaper Wednesday that such a sale is still under consideration.

In response to questions about that report, DaimlerChrysler issued a statement attributed to Chairman Dieter Zetsche in which he said, "in order to optimize and accelerate the presented plan, we are looking into further strategic options with partners beyond the business cooperation partners mentioned. In this regard, we do not exclude any option in order to find the best solution for both the Chrysler Group and DaimlerChrysler."

The statement seemed to suggest a change in thinking of DaimlerChrysler management. Zetsche, who had been in charge of the Chrysler unit until last year, previously had been on the record clearly supporting the company retaining its ownership of Chrysler.

The topic was likely to be discussed further at a press conference set to start at 9:30 a.m. ET.

Earlier in the day, the company announced that Chrysler's full-year loss was $1.48 billion. In the prior year, as competitors General Motors (Charts) and Ford Motor (Charts) struggled with losses from their auto operations, Chrysler Group posted a $2.02 billion profit for 2005.

Chrysler was hurt by declining sales, particularly in its pickup trucks and SUVs, as the company lost its long-held position as the No. 3 U.S. automaker to fall behind Toyota Motor (Charts) during the year. Honda Motor (Charts) also made gains at the expense of the traditional Big Three Detroit automakers.

Revenue at Chrysler Group fell to $62.2 billion for 2006 from $66.1 billion a year earlier, as the number of vehicles sold also fell 5 percent to 2.7 million.

Still, even with the loss at Chrysler, parent DaimlerChrysler (Charts) posted 2006 operating income of €5.52 billion in 2006, or $7.28 billion, up from €5.19 billion, or $6.84 billion, in 2005. The company saw substantial earnings improvement at the Mercedes Car Group as well as further earnings gains at its truck group and financial services unit.

Net income for the company after a series of special charges came to €3.2 billion, or $4.3 billion, up from €2.8 billion, or $3.8 billion a year earlier. Based on the reported net income, earnings per share amounted to €3.16, or $4.17 a share, up from €2.80 a share, or $3.70, in 2005.

The company said based on the divisions' projections, DaimlerChrysler should achieve a significant increase in profitability in the planning period of 2007 through 2009. But it did not give any specific earnings targets.

Edited February 14, 2007 by Dragon

[CSpec]

Pwned.

[avant1963]

Screw anyone (including this entire administration in DC) that says they can gage how "strong our economy is" by quoting the stock market. DCX announces thousands of layoffs, and their stock is up over $4. The stock market is not a sign of a strong economy for the "everyman", just the only people the current employees at the White House give a $h! about. It's time for an impeach-pink slip to be handed to them.

Sickening.

[regfootball]

Screw anyone (including this entire administration in DC) that says they can gage how "strong our economy is" by quoting the stock market. DCX announces thousands of layoffs, and their stock is up over $4. The stock market is not a sign of a strong economy for the "everyman", just the only people the current employees at the White House give a $h! about. It's time for an impeach-pink slip to be handed to them.

Sickening.

i think a lot of the middle class everyday public is getting sick of that sort of thing. everyone works their butt off but in the end all that is important is what the stock price is? Stock price should not be the ONLY indicator of a company's health. Too many jobs depend on the overall health of companies. Stock prices alone are too unstable and can be detrimental to our economies.

[avant1963]

I lived it with my last employer. We had a great job. We had little "silly" incentives, like when we reached our numbers, we got lunch bought for us. There were gift certificates for perfect attendance (I know it sounds stupid but I made $450 in Circuit City gift certs for two years of perfect attendance) and there was no problem paying for our education - classes, books, anything to help us grow. Then the big, happy company decided to "go public". The belts were tightened. We first lost any "extra" incentive programs (like the attendance), then the lunch went from once a month, to once a quarter to never. The company stopped paying into our Holiday parties (first they paid for everything, then half, then none) and forget about taking a class - on your dine only. There was no $$ for learning anymore. Then the layoffs and outsourcing, first 10 people (the low-end people that was no love lost) then 20 then the whole place. All in the name of the stock price. As soon as they went public, the $h! hit the fan... and this was a HUGE company (rhymes with Grudential). But they made a big deal that we all would get stocks. That was great, but I wasn't around long enough to be vested in the entire 180 shares (that I was "allowed" to BUY at IPO price and then sell for a couple of bucks woo-hoo) while the CEO took in I think 4 million shares as a bonus that year for "bringing us public". The CEO gets more money than I will make in two lifetimes and I get laid off. You wonder why I am cynical about this.

[FAPTurbo]

w00t 4 t3h H3M1 p0w3r!

[Dragon]

at brampton, most of the jobs lost will be admin and IT in the first year

[BrewSwillis]

Thanks Toyota, and your other Asian counterparts.

[CSpec]

Thanks Toyota, and your other Asian counterparts.

If Chrysler made decent cars they wouldn't be in trouble.

[DetroitNut90]

Thanks Toyota, and your other Asian counterparts.

Toyota didn't design the Sebring. Or the Compass.

[frogger]

Will they be able to product enough of their trademark shiny silver interior plastic when these cutbacks are implemented?

[BrewSwillis]

If Chrysler made decent cars they wouldn't be in trouble.

Toyota didn't design the Sebring. Or the Compass.

Read the reviews......they are decent cars. They just don't have the boatloads of cash that the Asians do (due to their unfair business practices, and unlevel domestic playing field) to buy the best interior materials. Chrysler cars have more style in their turn signal, then Toyota does on a whole car!

Like someone on here said recently. If Chrysler's had really nice interiors, there would be nothing to complain about.

Edited February 15, 2007 by BrewSwillis

[A Horse With No Name]

Screw anyone (including this entire administration in DC) that says they can gage how "strong our economy is" by quoting the stock market. DCX announces thousands of layoffs, and their stock is up over $4. The stock market is not a sign of a strong economy for the "everyman", just the only people the current employees at the White House give a $h! about. It's time for an impeach-pink slip to be handed to them.

Sickening.

It makes me want to work that much harder to elect good people in 2008.

Chris

[A Horse With No Name]

I lived it with my last employer. We had a great job. We had little "silly" incentives, like when we reached our numbers, we got lunch bought for us. There were gift certificates for perfect attendance (I know it sounds stupid but I made $450 in Circuit City gift certs for two years of perfect attendance) and there was no problem paying for our education - classes, books, anything to help us grow. Then the big, happy company decided to "go public". The belts were tightened. We first lost any "extra" incentive programs (like the attendance), then the lunch went from once a month, to once a quarter to never. The company stopped paying into our Holiday parties (first they paid for everything, then half, then none) and forget about taking a class - on your dine only. There was no $$ for learning anymore. Then the layoffs and outsourcing, first 10 people (the low-end people that was no love lost) then 20 then the whole place. All in the name of the stock price. As soon as they went public, the $h! hit the fan... and this was a HUGE company (rhymes with Grudential). But they made a big deal that we all would get stocks. That was great, but I wasn't around long enough to be vested in the entire 180 shares (that I was "allowed" to BUY at IPO price and then sell for a couple of bucks woo-hoo) while the CEO took in I think 4 million shares as a bonus that year for "bringing us public". The CEO gets more money than I will make in two lifetimes and I get laid off. You wonder why I am cynical about this.

I feel your pain brother. Here in Ohio our economy is in the $h!ter because of this kind of thinking.

Chris

[MyerShift]

Ouch.

[cletus8269]

plymouth disappeared 11 years ago... now it seems the rest of chrysler is headed for its deathbed too.

[Dragon]

Read the reviews......they are decent cars. They just don't have the boatloads of cash that the Asians do (due to their unfair business practices, and unlevel domestic playing field) to buy the best interior materials. Chrysler cars have more style in their turn signal, then Toyota does on a whole car!

Like someone on here said recently. If Chrysler's had really nice interiors, there would be nothing to complain about.

don't' blame the Asian car companies, they are just takin advantage, like GM or DCX would if they were in that position. blame the governments who setup the unfair trade practices.

[BrewSwillis]

don't' blame the Asian car companies, they are just takin advantage, like GM or DCX would if they were in that position. blame the governments who setup the unfair trade practices.

I do blame the government......but don't pretend that Toyota doesn't spend a ton of money lobbying the politicians, so that policies are not created to level the playing field.

Why do you think we still don't have any alternative fuels? The oil companies have alot of money for "campaign contributions".

[Variance]

Always so quick to blame the Asian companies...

Tell me, is anything Chrysler's fault?

Like someone on here said recently. If Chrysler's had really nice interiors, there would be nothing to complain about.

...except for the crappy design on many of the vehicles outside of the LX cars and the pathetic 2.7L V6s.

[cletus8269]

Always so quick to blame the Asian companies...

Tell me, is anything Chrysler's fault?

...except for the crappy design on many of the vehicles outside of the LX cars and the pathetic 2.7L V6s.

this is true. if they were designing cars to sell (which i think they do) they wouldnt have this problem. obviously everyone doesnt feel the gotta have vibe from dcx. how long ago was it that we saw thousands of mopars sitting in a huge lot waiting for a spot on dealer's lots that most likely werent coming?

[Polish_Kris]

Thanks Toyota, and your other Asian counterparts.

How is this Toyota's fault?

The only car that is selling is the Charger, 300, and Caravan. And the rest?

[BrewSwillis]

How is this Toyota's fault?

The only car that is selling is the Charger, 300, and Caravan. And the rest?

Sales do not equal profits. They have pleanty of sales, profits come when you have very little overhead and labor costs, like the Japanese. Chrysler sold over 2 million vehicles this past year:

Even the universally ridiculed Compass is on target to sell 60K units/year.

The PT Cruiser sold 138,000 units, up 4% over last year.

They sold 364,000 Rams.

I know that you can't argue that Toyota has unfair advantages is the US market (right?), even if it's is the government who should be making sure that competition is fair.....but just for a second, think if Toyota (or any other unfair Asian mfgs.) didn't exist, or all of their vehicle were $5,000.00 more (bringing them inline with price disadvantage the Big 3 are saddled with).....then Chrysler would have a much greater market, as would the rest of the Big 3. Their profits would be up, and the factories would not be underutilized. So, yeah......Toyota's fault.

[Variance]

If "if and buts" were candy and nuts...

Besides, how do the Japanese companies have an unfair advantage when their prices are often right in line if not greater than the Big 3 offerings? If you need your competitors to cost an extra $5,000 (wherever you got that figure from) for your products to be competitive, you have serious problems.

I repeat: Is anything Chrysler's fault or rather is anything not the Asians' fault? Everything I'm hearing from you is blaming them for all of Chrysler's problems.

[BrewSwillis]

If "if and buts" were candy and nuts...

Besides, how do the Japanese companies have an unfair advantage when their prices are often right in line if not greater than the Big 3 offerings? If you need your competitors to cost an extra $5,000 (wherever you got that figure from) for your products to be competitive, you have serious problems.

I repeat: Is anything Chrysler's fault or rather is anything not the Asians' fault? Everything I'm hearing from you is blaming them for all of Chrysler's problems.

Dingell, Levin and two other congressmen said that a weak yen had helped Japanese automakers increase their exports to the United States by more than 30% in 2006. Detroit automakers and their congressional allies say the yen bestows up to a $4,000-per-vehicle benefit for Japanese automakers.

It's also been noted that health care and pensions for retirees adds $1200 to each domestic vehicle sold. So, that's about $5200.

Yeah, some stuff is Chrysler's fault....obviously everyone makes some mistakes......but what does that have to do with Japanese automakers having an unfair advantage? What are you going to say that is Chrysler's fault that can't be fixed with a bunch of money, or more market share??

The prices are in line with the domestics, but then the Japanese brag about having more standard features.....the features the Big 3 had to offer as options just to stay competitive with the cheating Asians. DCX already brought this issue to the White House, and guess what......they did nothing. It's another shady thing they do. They keep the prices similar, so that the Big 3 can't accuse them of undercutting, then they load up the options so the comparos and magazines can tell you to buy the Japanese whatever because it has more standard features.

[GXT]

Last time I checked Chrysler was offering near $4,000 in incentives per car.

How much more does a good interior cost over a crappy one? Would $500 cover it? $1,000? And if they did that, could they get by with "only" $2,000 in incentives?

Can anyone point me to a good document showing how the yen translates to an unfair advantage for the asian automakers? With facts, please.

[Flybrian]

Can anyone point me to a good document showing how the yen translates to an unfair advantage for the asian automakers? With facts, please.

A weak yen makes Japanese-made exports cheaper to economies with strong currencies. Here are a few, but simply look at the progress Toyota, Honda, and Nissan make establishing manufacturing facilities in the United States and the numerous easy-to-find articles to corrolate weaker financial returns for the Japanese Big Three during times of rising yen and stronger returns in times of weak valuation. They even have a name for it - Endaka.

The Return of Endaka

The rising yen could lead to falling growth

By RICARDO SALUDO and ASSIF SHAMEEN

SEPTEMBER 17, 1999 VOL. 25 NO. 37

"We are watching every day, every minute, how the yen is doing. Premature appreciation is not good for the Japanese and other Asian economies. We'll take measures to prevent it." Ito Takatoshi, Japan's deputy vice minister of finance for international affairs, is explaining Tokyo's worries over the yen's steady strengthening from more than 120 to the dollar just two months ago to 107 last week. He would not say what action Japan might take, but his boss, Finance Minister Miyazawa Kiichi, favors joint Japan- U.S. intervention to send a strong signal to the markets.

What a difference a year makes. In August 1998, the weak yen was bad news for the region. It made Japanese exports more competitive against those of other East Asian countries, whose currencies then had to depreciate to help their products sell. To defend their money, central bankers had to keep interest rates high, making it difficult to rekindle economic growth amid the Asian Crisis

Then a confluence of events boosted the yen: in particular, the rush by hedge funds to pay their Japanese borrowings amid huge losses in Russia and other emerging markets. The funds had to buy trillions of yen to pay the loans, lifting the currency and easing the pressure on other Asian denominations. That, along with U.S. interest-rate cuts, set the stage for monetary loosening across Crisis-hit Asia - the beginning of its ongoing recovery.

Now, 12 months later, the rising yen, or endaka, is threatening Japan's incipient recovery by making its companies less competitive against foreign rivals and worsening the deflationary spiral slashing corporate profits and economic growth. And, Ito told Asiaweek, "if the Japanese recovery falters, it's not good for other Asian economies." Andrew Shipley, an economist with Schroders Securities in Tokyo, agrees: "With the yen surging, Japan is in big trouble. This can't be good for Asia or the rest of the world, which wants to sell to Japan." By importing more, a rebounding Japan would be a new engine of global expansion as the U.S. economy slows to a more sustainable pace.

Shipley expects the Japanese economy to shrink 0.3% in the year ending next March - if the yen depreciates to 130-140 to the dollar. "If the yen stays close to where it is today, I'll have to revise my forecasts downwards," he cautions. "A strong yen is increasing imported deflation ... choking growth and is an impediment to recovery." By making imports cheaper, endaka forces down domestic prices, cutting business revenues and raising the real cost of repaying debt. "Bank balance sheets will further erode as a deflationary spiral takes hold," Shipley warns. He ventures that a good exchange rate for recovery is 140-150 to the greenback.

Japan's Automakers Face Endaka

Harvard Business Online

In April 1995, the Japanese yen hit a post-World War II high against the U.S. dollar. The yen's relentless ascent affected firms on both sides of the Pacific, but fell particularly hard on Japan's big four automakers. This case explores how endaka--or"high yen"--changes the competitive environment for the automakers and how they respond to the change. Examines how macroeconomic and political shifts can dramatically affect the competitive position of firms operating in a global economy. Also describes how firms can reshape their strategies to compete even in starkly different domestic environments.

[Duncan]

So, this topic dates to February. Has the upcoming Cerberus buyout changed this forecast? 'Cause last I heard, the Cerberus people were saying something about not having to cut jobs with the transition...