Chrysler to Slash 25 Percent Of Its White-Collar Workers
Saturday, October 25, 2008
Chrysler told employees yesterday that it would be cutting 25 percent of its white-collar workforce by the end of the year to trim costs and warned of restructuring in the near future.
The automaker, the smallest of Detroit's Big Three, will eliminate up to 5,000 employees. Next month, Chrysler will begin offering early retirements and buyouts to about 17,332 salaried employees and an undisclosed number of people who work for other companies under contract with the automaker. Without mentioning specifics, the company said it plans layoffs by the end of December.
In a letter outlining the cuts, chief executive Robert Nardelli said that during the current economic tailspin, "actions will be needed to re-size our company to remain competitive."
"Never before have auto industry sales contracted at such a fast rate," he wrote.
Plans for restructuring will come soon, Nardelli said, reflecting Chrysler's "need to find new ways to operate."
Just a day before, Chrysler announced it would be cutting 1,825 jobs as it shuts a Delaware plant a year ahead of schedule and slashes output at an Ohio facility. At a time when consumers are clamoring for fuel-efficient cars, Chrysler's iconic Jeeps, pickups and minivans are falling out of favor.
The company reported a 25 percent slump in sales in the first nine months of this year. Automakers across the Pacific haven't fared much better.
Toyota reported its first drop in quarterly sales in seven years. The world's second largest automaker sold about 2.236 million vehicles worldwide in the three months ended Sept. 30, down 4.3 percent from 2.336 million a year earlier.
Cerberus Capital Management, the private investment firm that owns 80 percent of Chrysler, is in talks to sell the automaker or form alliances with other companies. GM and a combination of Nissan and Renault have both been rumored to be in the running.
Last year Cerberus purchased its majority stake from Daimler and inherited Chrysler's $19 billion in pension and health liabilities, which had become a massive burden on the shrinking operation. Like many other companies, the investment firm's operational problems have been magnified by the credit crisis and economic downturn, which have limited its options, said Maryanne Keller, a longtime industry analyst.
"It bought a company with not very much in the product pipeline at a time when new product introduction," she said, "and the rate of new technologies being introduced is going to be faster than ever."