Early this month, Chrysler Corp. announced it was freezing its present work force of white collar workers and telling 28,000 non-union salaried employes to take a week of their 1980 vacation this year. It also disclosed it has applied for a $50 million loan guarantee from - of all places - the Farmers Home Loan Administration, to help it expand its Kokomo, Ind., transaxle plant.
The No. 3 automaker has piled up losses of more than $250 million in the past 15 months. And Chrysler expects continued losses for the rest of this year. Many financial analysts don't expect it to make money before late 1980 when it unveils in 1981 models.
Although almost no one expects Chrysler to go bankrupt, many observers expect it to emerge from this latest financial blood-letting as a smaller company, no longer competing in every market segment with Ford and General Motors. "Some day, while they will be larger than American Motors Corp., Chrysler will be two-thirds to half its former size," and Eugene Jennings, a management professor at Michigan State University. "It will probably be a very good company."
Traditionally the weakest and most debt-ridden of the major auto companies, Chrysler has swung precariously form profit to loss and back. In 1974 and 1975, the company lost more than $310 million before wiping it out in 1976 with a $423 million profit.
Since last year, it has suffered a combination of bad planning and lousy luck. Chrysler hurried to get back into the profitable big-car market last fall, but its costly down-sized models are afflicted with production and quality problems. When the market turned to small cars this spring, Chrysler had to limit production of its hot-selling Omni and Horizon sub-compacts because it couldn't get enough engines from Volkswagen, which supplies from.
Chrysler also faces the financial drain of meeting government-mandated fuel economy, safety and emission standards at a cost it estimates at $7.5 billion for the five years ending in 1982. So it turned to the accountants and efficiency experts to come up with some cash.
Rebuffed earlier in an effort to get a federal loan guarantee to help in a $300 million renovation of its Trenton, Mich., engine plant. Chrysler came up with the idea of using a government program to help farm communities in expanding its Kokomo operation. "If we could find another (government) provision we could fit into, we would," said Chrysler Treasurer William G. Mc.Gagh in an interview recently. "We're delighted to get any help that we can."
Moving some vacation time ahead one year was explained as a way to push the accumulated time off from the company's end-of-year financial statement. In other belt-tightening measures:
Chrysler Financial Corp., which makes auto loans, is selling several of its foreign companies in Western Europe and Latin America. Proceeds will bring $100 million in cash for Chrysler.
Chrysler is leasing new plant equipment from a group of finance companies instead of buying it outright, enabling it to save $100 million in expenditures this year.
Employes in a company stock plan will buy shares from Chrysler instead of from the open market, resulting in a cash gain of $40 million to $50 million in 1979.
Closings were announced for the Dodge main assembly plant in Hamtranck, Mich., which builds Apsen and Volare compacts and a small trim plant in Lyons, Mich. The antiquated Hamtranck plant "had a cost penalty . . . in the many millions of dollars," a spokesman said.
Last year, Chrysler's share of the U.S. car market fell to a 10-year low of 11.1 percent, a drop of a full percentage point from 1977 and a far cry from the 20-plus percent share that put it ahead of Ford in the early 1950s. Since Jan. 1, its share has edged up to 11.8 percent while sales have roughly matched year-earlier levels.
McGagh won't indicate what financial moves Chrysler will make this year. But he said "the kind of company which has done in the past couple of years will probably do the same thing in the future." Last year, the company made a number of similar maneuvers which improved its cash position and trimmed assets at the expense of future earnings.
It sold $250 million of preferred stock, sold its European operating and finance companies to PSA Peugot-Citroen, now the world's third-largest auto company, based in France, for $300 million and an equity interest of 15 percent and arranged long-term loans of $300 million.
Chrysler also sold two-thirds of its Brazilian subsidiary to Volkswagen for $50 million, as well as its entire Venezuelan operation and its 77 percent ownership of a Colombian subsidiary to General Motors. And 15 percent of Chrysler Australia recently was sold to Mitsubishi, the Japanese automaker of which Chrysler owns 15 percent.
This substanial retreat from overseas markets won high marks from analysts as a way to reduce financial drain into those marginal operations. But it means Chrysler largely has taken itself out of the running in those key markets, which are growing at about twice the pace of North America. And Chrysler still has drains on working capital from its historically weak market performance.
Chrysler owns a majority interest in 219 of its 4,800 dealerships, and the company-owned outlets lost nearly $27 million last year. Some of the dealerships are being operated by the company until new owners can be found but others are simply too unprofitable for private individuals.
Chrysler's marine division, which makes boats and motors, has lost money. White McGagh wouldn't say whether it is now in the red, he said it and other peripheral operations are for sale "at the right price."
Unlike Ford and GM, Chrrysler builds cars whether its dealers have ordered them or not. That means interest payments to banks when inventories run high.
These financial burdens, coupled with its ongoing sales performance, will "make it difficult for Chrysler to play catch-up inteligently" in the auto market, one analyst says. Already the company, with total assets of $6.9 million at the end of last year, is one-third the size of Ford and less than one-forth the size of GM. CAPTION: Picture, LEE IACOCCA ". . . don't know about it."