If you were wondering how quickly Chrysler would be able to move as a privately-held entity in its efforts to turn the business around, wonder no more. It can move quickly. Today, the automaker officially announced a number of cuts to both its workforce and product lineup into 2008 that are intended to help get Chrysler back in the black.
Here's the rundown:
- Elimination of shifts at Belvidere, IL; Jefferson North (Detroit, MI) ; Toledo, OH; Brampton, Ontario; and Mack Avenue II (Detroit). The Detroit News reports these actions effectively eliminates approx. 4,000 hourly positions. Chrysler states that the new shift reductions, when combined with "other volume-related actions," will result in the elimination of a total 8,000 to 10,000 hourly positions.
- 1,000 salaried positions will be eliminated
- 37% of contractor positions will be eliminated (The Detroit News attaches a number of 1,100 to this)
- Four models will be dropped from the lineup: Chrysler PT Cruiser Convertible (the regular PT lives on) , Dodge Magnum, Chrysler Pacifica, and Chrysler Crossfire
Some of the wish-list vehicles that readers hoped would also see the axe, such as the Jeep Compass and Jeep Commander, live on. Chrysler's press release and a confirmed copy of the email sent to employees this morning by CEO Bob Nardelli are included after the jump. You can also click the "Read" link below to check out the Detroit News coverage.
[Sources: The Detroit News, Chrysler]
BOB NARDELLI E-MAIL TO CHRYSLER EMPLOYEES:
Today, we will announce some tough but necessary actions for Chrysler: the elimination of some assembly plant shifts, reductions in salaried and contract employees, and the phaseout of four of our products. These changes are part of our continuing efforts to right-size our business for the current market and competitive environment. They should not diminish our faith in our long-term strategy nor reduce our resolve to become a leader in the automotive industry.
I regret that short-term actions are required on our path to long-term success. Since the announcement of the Recovery and Transformation Plan (RTP) in February, the market dynamics -- especially in the United States -- have changed dramatically. The soft housing market and the spike in oil and gas prices have had a seriously adverse impact on consumer confidence and spending. Back in February, U.S. light-vehicle sales were running at a rate of 17.2 million vehicles. We now expect volume for 2007 to be significantly lower and carry over into 2008.
To succeed, we must align our costs with the market realities and the economic conditions we expect. We must position Chrysler to return to profitability next year without pushing unprofitable volumes of product through our plants and into our dealers' showrooms or fleet. This would only lead to a downward spiral of higher incentives, weaker brands, lower residual values and poor relationships with our dealers. That's why we are committed to right-size our costs and achieve inventory levels that are 100,000 units lower at the end of 2007 compared with last year.
We must move with speed and flexibility to meet the needs of a constantly changing market. This means continually re-evaluating our model lineup in order to ensure that our current and future product portfolios hit the sweet spots in the market. As a customer-driven company, we must sharply focus our limited resources on the most profitable and appealing products.
The following is a summary of the changes we are announcing today:
• Shifts will be eliminated at five North American assembly plants: Belvidere, Jefferson North, Toledo North, Brampton and Sterling Heights. Combined with other volume-related manufacturing actions, this will lead to a reduction of an additional 8,500-10,000 hourly jobs through 2008.
• A shift will be eliminated at Mack Avenue Engine Plant II.
• Salaried employment will be reduced by 1,000 and contract employment by 37 percent. Additional reductions will be made in hourly and salaried overtime and purchased services due to the decline in volume.
• Four models will be eliminated through 2008 -- the Dodge Magnum, the convertible version of Chrysler PT Cruiser, Chrysler Pacifica and Chrysler Crossfire. During the same time frame, we will add the all-new Dodge Journey and Dodge Challenger to our portfolio, along with two new hybrid versions of the Chrysler Aspen and Dodge Durango.
Going forward, we need to concentrate on three areas in order to transform our company into a top performer.
First, we must rebuild a strong partnership with our dealers, who are an extension of our company and our only direct customers. We've taken major steps down this road by reducing our inventory and scaling back our fleet business to improve residuals.
Second, we must maintain a laser focus on the five business fundamentals our leadership has identified as the building blocks for success. You should have recently heard a report from your management on the five fundamentals: Customer First; Quality ... Period; Go Global; Be Green; and Powered by Great People.
Third, we must execute. With the RTP we have a clear and realistic strategy for success that does not need to be rewritten. We must now execute seamlessly, with a bias toward speed, a focus on the customer, and an emphasis on teamwork and achieving cross-functional goals. More than ever, your individual performance will determine your personal success and that of the company overall.
Thank you for your continued support and dedication as we drive to transform Chrysler into an enterprise that is stronger than ever and able to thrive in today's highly competitive marketplace.
Chrysler Announces Product and Plant Changes
-- Industry-wide volume reduction and sales slow down requires plant adjustments -- Four products will be cancelled from Chrysler line-up; while adding two all-new products and two hybrid models
AUBURN HILLS, Mich., Nov. 1 /PRNewswire/ -- Chrysler LLC today announced that it would make volume-related reductions at several of its North American assembly and powertrain plants, and eliminate four products from its line-up.
Shifts will be eliminated at five North American assembly plants which, combined with other volume-related manufacturing actions, will lead to a reduction of 8,500-10,000 additional hourly jobs through 2008.
Additional actions include reductions of salaried employment by 1,000 and supplemental (contract) employment by 37 percent. The Company also plans to eliminate hourly and salaried overtime and reduce purchased services due to reduction in volume.
The volume-related actions are in addition to 13,000 jobs eliminated by the three-year Recovery and Transformation Plan (RTP) announced in February. The objectives of the RTP remain the same.
"The market situation has changed dramatically in the eight months since Chrysler established the Recovery and Transformation Plan as its blueprint," said Bob Nardelli, Chairman and Chief Executive Officer. "Annual industry volume (U.S. market) then was running at a 17.2 million clip. Now, we expect a seasonally adjusted annual volume for 2007 to be significantly lower and carry over into 2008."
"We have to move now to adjust the way our company looks and acts to reflect a smaller market," added Tom LaSorda, Vice Chairman and President. "That means a cost base that is right-sized and an appropriate level of plant utilization."
LaSorda added that third-shift operations at assembly plants usually reflect a high demand after a product is launched. Three of the five plants affected by this action are the result of elimination of third shifts - in Belvidere, Illinois; Toledo, Ohio, and Brampton, Ontario.
In contract negotiations just concluded with the United Auto Workers, Chrysler committed to spending more than $15 billion on products, plants and engineering during the life of the contract through 2011.
The company announced that it will eliminate four models through 2008, including Dodge Magnum, the convertible version (only) of Chrysler PT Cruiser, Chrysler Pacifica and Chrysler Crossfire. In the same time frame, Chrysler will add two all-new products to its portfolio: the Dodge Journey and Dodge Challenger, along with two new hybrid models, the Chrysler Aspen and Dodge Durango.
"These actions reflect our new customer-driven philosophy and allow us to focus our resources on new, more profitable and appealing products," added Jim Press, Vice Chairman and President. "Further, these product actions are all in response to dealer requests."
Chrysler will eliminate shifts at five assembly plants, and take further volume-related actions at several other facilities. It will:
Drop third-shift operations at Belvidere (Ill.) Assembly Plant in the first quarter 2008. Belvidere builds the Dodge Caliber, Jeep Patriot and Jeep Compass.
Drop second-shift operations at its Jefferson North (Detroit, Mich.) Assembly Plant in the first quarter 2008. It's expected that the plant will return to two shifts in first quarter 2010 with the introduction of the next generation of sport-utility vehicles. The addition of a third shift will remain an option, depending on market demand. Jefferson North builds the Jeep Grand Cherokee and Jeep Commander.
Drop third-shift operations at the Toledo (Ohio) North Assembly Plant in the first quarter 2008. Toledo North builds the Jeep Liberty and Dodge Nitro.
Drop third-shift operations at Brampton (Ontario) Assembly Plant in first quarter 2008. Brampton will build the Chrysler 300, Dodge Charger and Dodge Challenger. The Dodge Magnum will be discontinued.
Drop second shift operations at Sterling Heights (Mich.) Assembly Plant in first quarter 2008. Sterling Heights builds the Dodge Avenger and Chrysler Sebring sedans and Chrysler Sebring Convertible.
In addition, Mack Avenue (Detroit) Engine Plant II will return to a traditional two-shift / two-crew operation in the first quarter 2008 after operating on a three-crew, two-shift, 120-hour-per-week (3/2/120) schedule. Mack II builds the 3.7-liter V-6 engine.
"I'm confident that we have the right team in place and a business plan that doesn't need to be re-written," concluded Nardelli. "Like all good plans, the RTP has built-in flexibility that allows us to stay one step ahead of market change. And that is the way to long-term sustained profitability."