Bob Nardelli to Employees: We're cutting 25% of remaining white-collar jobs
"These are truly unimaginable times for our industry." That's how Chrysler CEO, Bob Nardelli, starts off a recent email to employees, just before dropping the bomb that the automaker intends to cut 25% of its salaried workforce beginning next month and continuing through the end of the year.
According to reports, Chrysler currently has 17,332 salaried workers, so 4,333 workers will be offered "voluntary" retirements and buyouts, while those who don't accept the automaker's offer, which includes "enhanced benefits" of cash and new vehicle vouchers, will be laid off. This is in addition to the 1,000 white-collar jobs Chrysler cut at the end of September.
Chrysler also plans to cut back on "all discretionary and overhead expenses and reduce capital expenditures not connected to major product programs." Nardelli admits that the company can't continue as it has in the past and that these tactics are an attempt to right-size the company to "reflect declines in volume." While we understand the trials and tribulations faced by Chrysler, Nardelli's email has a "this is going to hurt me more than you" ring to it. Judge for yourself after the jump.
Dear Employees,
These are truly unimaginable times for our industry. We continue to be in the most difficult economic period any of us can remember. The combination of troubled financial markets, difficult credit, volatile commodity prices, the housing crisis and declining consumer confidence continues to weigh on the economy. Never before have auto industry sales contracted at such a fast rate. Throughout this challenging time for our industry and our company, we have continued to face the realities of our business environment. Working as a team, we have been right-sizing our organization to become as competitive as possible.
As business conditions today continue to decline, and we prepare for economic challenges extending into 2009, additional actions will be needed to re-size our company to remain competitive. Due to the unprecedented conditions in the auto industry, both in our home and international markets, we are targeting a 25 percent reduction in our salaried and supplemental work force. As always, we will strive to do this in a socially responsible way, with respect and gratitude to those who have contributed so much to our company over the years.
Your leadership team will receive the details on new voluntary programs today that will be made available to Chrysler salaried employees beginning in November. These new programs will be available to a broader group than before and will feature enhanced benefits, including both cash and new-vehicle vouchers. Your management will share all the program details with you in the next few days. I hope that every eligible employee takes time to seriously consider these enhanced offerings given the current environment. In addition, it will be necessary to have involuntary separation actions at the end of December, which is why the company is also issuing a WARN act notice today.
We need to work harder and more diligently to control every expense. To that end, we are eliminating in some cases, and cutting back on all discretionary and overhead expenses. Details of this initiative will be communicated through your leadership team. As an additional cost savings measure, we also will be reducing capital expenditures, but I assure you that we are protecting all major product programs.
As we re-size the company to reflect declines in volume, we know we must find new and more efficient ways to conduct our business operations. We recognize that in order to strengthen our competitive capability, and reduce the time and cost to achieve our objectives, we cannot operate as we have in the past. In the near future, we will be making organizational announcements as a result of restructuring actions reflecting the need to find new ways to operate, while still recognizing the importance of focusing on the customer, a relentless commitment to quality and investing in the programs that we need to compete in the marketplace.
I realize the appetite to know what the future holds for Chrysler is tremendous. Media speculation about our fate continues to be rampant. As a matter of company policy, Chrysler does not confirm or disclose the nature of its business meetings, in many cases to comply with legal requirements, as well as protect the integrity of our Company and those with whom we meet. When erroneous reports can be corrected with definitive answers, I support dealing with these issues in a clear and direct manner. I want to assure you that your leadership team is committed to communicating fully and directly to you if, and when, there is something to announce.
The Chrysler team has been through tremendous change over the years through the many ups and downs of this industry. During these tumultuous times, I encourage you to help each other to keep a sharp focus on the important tasks at hand.
Thank you for your continued dedication.
Bob
Reader Comments (Page 1 of 3)
TJ 1:01PM (10/24/2008)
Trimming the fat prior to takeover (not merger). Attempting to make the company appear more marketable (appealing) with less overhead.
This is a sign that a pending sale is imminent.
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Tim 1:06PM (10/24/2008)
Lets hope its a sale and not a gov't bailout...
jamie 1:24PM (10/24/2008)
My sentiments exactly.
No doubt this is part of the deal that is unfolding between Chrysler and GM. GM wants to get rid of as many encumbrances as possible before GM moves in and while Chrysler is still privately held by Cerberus.
Lop off as much fat as you can before the deal, so you don't have to start dieting! Makes sense.
Gabagool 1:39PM (10/24/2008)
In sure and certain hope of the resurrection to eternal life through our Lord Jesus Christ, we commend to Almighty God our brother Chrysler; and we commit his body to the ground; earth to earth; ashes to ashes, dust to dust. The Lord bless him and keep him, the Lord make his face to shine upon him and be gracious unto him and give him peace. Amen.
TJ 1:49PM (10/24/2008)
I have been with three different companies in the past five years that went through mergers or acquisitions. With each one, rumors preceded production/departmental scale-back preceded layoffs preceded formal public announcement.
geo.stewart 1:52PM (10/24/2008)
typical Nardelli.
his MO has always been to slash and slash.
can definitely see this as prep for buyout/merger. getting it all slashed before EOY, so fresh for next year;s books, and buyout by end of CY09.
the key will be to see which depts get hit hardest, or if it is across the board.
Bryan 5:12PM (10/24/2008)
+1, my thoughts exactly.
J M C 3 1:04PM (10/24/2008)
I'm sure Nardelli will be hurt but He'll probably escape with a few million to soften the blow.
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Gabagool 1:09PM (10/24/2008)
His salary is $1, and a bonus.
Look, stop confusing Nardelli with Wagoner, not every Auto CEO is a deadbeat, criminal, fraudster and a parasite all in one.
J M C 3 1:13PM (10/24/2008)
What's the bonus?
J M C 3 1:16PM (10/24/2008)
What's the bonus?
TJ 1:16PM (10/24/2008)
Nardelli made enough with the pillaging of Depot that he could pay Chrysler a working man's salary each year for the rest of his life to stay at the helm. He doesn't need the money.
Big Rocket 1:21PM (10/24/2008)
@Gabagool: Nardelli is no angel himself.
Financial Times: "Mr Nardelli faced an avalanche of criticism over his $210m (£105m) severance package from US retailer Home Depot in January... which has become a symbol of the outsized compensation commanded by top US executives..."
Gabagool 1:22PM (10/24/2008)
It is undisclosed but once again, he became a CEO in August 2007, Wagoner in 2000 and wagoner has a RECORD of destroying a company all the while making 17Million dollars a year.
Gabagool 1:23PM (10/24/2008)
@ Big Rocket, ohh i knew all of that, i knew that he took 200 Mil, but i am now talking about Auto sector in particular.
hyundaifans.com 1:28PM (10/24/2008)
Nardelli is just like the rest of them. Look how much he raped HD for when he left!
Big Rocket 1:48PM (10/24/2008)
@Gabagool: Then wouldn't it be more accurate to portray both Nardelli and Wagoner in the same light? If you restrict your viewpoint to just the automotive sector, you miss the bigger picture: Both CEO's have been overly compensated while they underperformed. Isn't overcompensation for underperforming CEO's the key issue here, regardless of which industry?
Gabagool 2:00PM (10/24/2008)
Rocket you do have a point, but in Auto segment Wagoner has been committing his crimes for far longer, he was a CEO since 2000 and a CFO prior to that, Nardelli was a HD guy prior to 2007.
In terms of the bigger picture you are correct, but since this is AUTOblog, Wagoner is by far a bigger criminal.
Shiftright 3:01PM (10/24/2008)
Isn't this the same asswipe that made Home Depot stock practically worthless and bailed with a golden parachute in the tens of millions?
TJ 3:11PM (10/24/2008)
Tens? try $210m