Signs Points to More Chrysler Job Cuts
Friday, December 7, 2007; 6:03 AM
DETROIT -- For a newly private company, executives at Chrysler LLC haven't been too secretive about the numbers on their balance sheet.
Twice in the past two weeks, top executives have said Chrysler will lose $1 billion or more this year, leading several industry analysts and some employees to believe that they are preparing workers and the marketplace for further cuts in models, factory capacity and jobs.
"They don't have to say anything if they don't want to," said Global Insight analyst Aaron Bragman. "They're making a bit more of a public announcement to it, and I would surmise that is because there are more cuts coming."
The company delivered on some temporary cuts Thursday, saying it will shut down shifts at two U.S. pickup truck plants _ St. Louis North and Warren, Mich. _ for the whole month of January. It also will idle a pickup plant in Mexico for two weeks next month, all due to slumping pickup sales.
The truck plant shutdowns are temporary and designed to control growing inventory, said a person who was briefed on Chrysler's production plans. The person spoke on the condition of anonymity because the plans could be changed.
Chief Executive Robert Nardelli told a group of employees this week that the company is headed for a $1.6 billion loss this year. Last week, Executive Vice President of North American Sales Steven J. Landry told a group of Canadian business students that expenses were $1 billion more than revenue.
Even former Chrysler CEO Dieter Zetsche got in on the predictions, telling reporters in Washington on Tuesday that Chrysler isn't expected to be profitable this year or next. Zetsche, CEO of German automaker Daimler AG, led the sale of 80.1 percent of Chrysler in August to Cerberus Capital Management LP, with Daimler holding the remainder of the company.
All of this tells the analysts that people should be ready for more bad news out of Chrysler's Auburn Hills headquarters.
"They've absolutely got to make some additional cuts in expenses," said Pete Hastings, an auto industry corporate bonds analyst with Morgan Keegan & Co. "Sales volumes are going to be difficult to achieve in 2008 because of the economy, tightening credit standards and that sort of thing. The fact that they've lost a lot of money with new owners doesn't leave a lot of room to look elsewhere."
Chrysler in November announced plans to cut up to 12,000 jobs, just after employees represented by the United Auto Workers ratified a new four-year contract with the company. The cuts include 8,500 to 10,000 hourly jobs and 2,100 salaried jobs through 2008, or about 15 percent of the company's work force. That's on top of 13,000 Chrysler job reductions announced in February.
Company spokesman Mike Aberlich said there are no present plans to make permanent reductions beyond what's already been announced. But he wouldn't rule out additional job or plant cuts.
"With the economy the way it is, with the market the way it is, you never quite say never," Aberlich said.