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Chrysler to Slash 26,000 Jobs
   Fox Market Wire
Struggling to stem losses in its U.S.-based Chrysler division, DaimlerChrysler AG announced Monday it will cut 26,000 jobs in the unit over three years.

Paul Warner/AP
DaimlerChrysler Chairman Juergen Schrempp said on Jan. 15 that he would revive U.S.-based Chrysler, with no plans to sell or spin it off.

The layoffs, part of a major restructuring plan, account for about 20 percent of Chrysler's North American work force. The company said Monday it expects a large part of the job-cutting to be done through retirement programs in place under current union contracts.

The plan also calls for six manufacturing plants to be idled through 2002, reducing overall production capability by 15 percent.

"These decisions are absolutely necessary to be kept competitive and in fact to survive," Chrysler group president and chief executive Dieter Zetsche said in a Monday news conference. "They must be made as soon as possible to take control of costs and end uncertainty that many people are feeling."

The automaker would not disclose how much money the job cuts would save the company.

All of the layoffs will be achieved through a combination of retirements, special programs, layoffs and attrition, and will involve 19,000 hourly workers and 6,800 salaried employees, Chrysler said. The company expects that three-quarters of the overall reduction will be achieved this year.

Zetsche said Chrysler will unveil its complete plan to turn itself around on Feb. 26.

Chrysler posted a third-quarter loss of $512 million and has warned that its fourth-quarter loss could more than double that, given a soft U.S. auto market.

On Saturday, Germany's Stuttgarter Zeitung newspaper reported the Chrysler unit could lose $1.3 billion in the fourth quarter.

DaimlerChrysler's stock price has fallen steadily since reaching a high of $108 in January 1999. In Monday morning trading on the New York Stock Exchange, the company's stock was down 58 cents to $47.66.

'People at Chrysler Have Faced This Before'

DaimlerChrysler has insisted it has no plans to spin off or sell Chrysler, which it bought in 1998 as part of its plan to extend the company's global reach.

United Auto Workers spokesman Paul Krell declined to comment on the announcement. The union represents Chrysler's hourly workers.

Chrysler said employees covered by the UAW will receive 95 percent of their regular pay.

"The only consolation is that many people at Chrysler have faced this before and responded well," Zetsche said.

Production will be scaled back at plants in four states and Canada, including Detroit, Belvidere, Ill.; Toledo, Ohio; Newark, Del.; Brampton, Ontario; and two sites in Windsor, Ontario.

The company also plans to shift production from a Detroit engine plant to two other sites. In Mexico, Chrysler plans to shift production from its assembly plant in Lago Alberto and close its Toluca engine plant.

Plants slated to be idled include the Toluca transmission plant in Mexico and assembly plants in Cordoba, Argentina, and Parana, Brazil.

— The Associated Press contributed to this report

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