Chrysler has killed the PT Convertible, Pacifica, Crossfire, and Dodge Magnum
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:
Dear Colleagues,
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.
Bob
####
PRESS RELEASE:
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."
Manufacturing Actions
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."
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Reader Comments (Page 1 of 4)
Aki @ Nov 1st 2007 11:41AM
Crazy. That means at the low end 10.1k ppl will be out of a job.
Bob-omb @ Nov 1st 2007 11:44AM
So the Pacifica's not good enough, but the Compass, Patriot, Commander, and Aspen are. Wow.
John R @ Nov 1st 2007 11:54AM
It looks like the ones you mention sell better than the Pacifica, eventhough it is a better car. However, the Pacifica was not a cheap car anyway and some people will not pay that much for a percieved minivan from Chrysler
doug @ Nov 1st 2007 11:44AM
So, does Chrysler get to actually terminate these people, or did they all just go into the Job Bank? What does the new contract say?
Guenther @ Nov 1st 2007 11:47AM
Funny you say Commander and Compass. Discontinuing these vehicles doesn't make sense just yet, because they roll down the same lines the Grand Cherokee and Caliber, respectively. The Pacifica, being based on old van bits (and maybe some LH parts) was an orphan, as was the PT without its PL. The crossfire really was forgotten.
It just keeps getting darker in Michigan...
Tricky dicky @ Nov 1st 2007 1:22PM
Good points.. funny what a little logic does. The compass is the best selling jeep model so far in canada this year. It has (in the US) a > 60% conquest rate, ie it is bringing new people to the brand which they need. It was inexpensive to develop as well.
I would agree they could put something in the dodge lineup like that and keep jeep more traditional but no need to cut their nose off to please a bunch of hacks on the internet who won't buy chrysler products anyways.
good move for chrysler levelling production though.
Alex @ Nov 1st 2007 11:48AM
The crossfire actually kind of surprises me. I thought it was intentionally a low volume car used just to give the brand a sporting edge. i guess the edge was too dull...
JD @ Nov 1st 2007 12:32PM
Well, it was based on the last gen MB SLK and released as the new SLK was coming out, which, by all accounts, has a vastly improved platform over the first gen. Is it any wonder it didn't sell well?
h8rain @ Nov 1st 2007 1:26PM
I thought it was axed like a year or two ago?.....Guess not, well it is now.
Kowell @ Nov 1st 2007 11:48AM
I still don't see why the Aspen and Regular PT get to live...
psarhjinian @ Nov 1st 2007 11:52AM
The regular PT is still a decent seller, is cheap to make, fairly highly-rated in the likes of Consumer Reports and, most importantly, has been fully amortized.
The Aspen, though...
TheOne442 @ Nov 1st 2007 11:53AM
I'm really sad to see the Magnum go. The others I would expect though.
Lemmiwinks @ Nov 1st 2007 12:47PM
Me too. I really really liked the Magnum. I see a lot of them on the road, so this decision puzzles me.
I don't have a clue as to why they're even bothering to bring the Journey to the market.
gearhead18 @ Nov 3rd 2007 1:15AM
Yeah the magnum was a cool car and the front clip fit a 300C perfectly, they coulda made a Magnum Sedan and brought the 300 Touring to Canada and the States. I still beleive that the Compass needs to be axed because something missing what is it again... Oh yeah a trail rated badge and a transfer case on the base model. That's my big pet peeve about it.
RicardoHead @ Nov 1st 2007 11:54AM
Wont miss any of them except maybe the Pacifica a little.
The Pacifica was actually kinda cool but seemed highly priced. Decently loaded it was coming in at the mid 30k range which puts it up against some fair entry luxury competitors and now the awesome lambda trio. Probably could have got a bit more market at a different price point, but .... sayanara Pacifica-san!
FrankTheCrank @ Nov 1st 2007 1:12PM
I was surprised to hear the Pacifica would go. It looks like a great car, the perfect family sedan/crossover....
Sad about the Magnum too.
Buh-bye...PT conv....and RIP Crossfire.
chuck goolsbee @ Nov 1st 2007 11:55AM
Good riddance to the PT Conv!
I had one recently as a rental... what a craptatstic car!
BTW, how come the majority of PT Cruisers you see on the road say "Limited Edition" on the back of them? Isn't that an oxymoron?
--chuck
http://chuck.goolsbee.org
RamSport47 @ Nov 1st 2007 7:08PM
The don't say "Limited Edition", they say "Limited" which is a model designation like the Holier than thou EX and DX, et all.
Alex @ Nov 1st 2007 11:56AM
Sorry to see the Magnum and Crossfire go...
Bold cars...
Others are indeed worthless and needed to go, but these two had character.
strongbadinator @ Nov 1st 2007 3:24PM
Ditto. The crossfire was a pretty sexy looking car. They're always drawing my attentiont wherever they drive. It's too bad... the magnum was also a good alternative to owning a stupid SUV. Plenty of cargo room, and V8 powah!!!
I don't know why they're cutting all the CARS out of their lineup, it seems with fuel costs the things to quit making would be gas guzzling pigs that have resale values plummetting harder and harder thanks to rising fuel costs. Idiots.