Chrysler offers new round of buyouts
LLC will offer buyouts to more than 13,000 hourly workers in Michigan, in the latest wave of job-reductions sweeping the hard-hit auto industry.Chrysler did not disclose a specific reduction target on Friday, but company officials said they wanted to eliminate at least 2,000 jobs, representing the number of idled workers collecting wages in the Chrysler jobs bank.
All automakers are struggling in the U.S. market, which has sunk to its lowest level in more than a decade. But Chrysler has contracted more than any of its major rivals. Its sales through August have fallen 24 percent, or more than double the overall market’s decline.
General Motors Corp. and Ford Motor Co. also are cutting jobs in what has become a constant downsizing of the U.S. auto industry. GM offered early retirement packages last month to around 9,000 salaried workers, in the hopes of trimming its U.S. white-collar work force by 28 percent.
Ford Motor Co. executives told United Auto Workers representatives this week that the company has around 4,200 more hourly employees at its U.S. plants than Ford needed.
Chrysler announced in July that it was planning to cut 1,000 salaried positions by the end of September.
The automaker has been particularly hard hit by the shift from large to smaller vehicles.
Compared with Ford, GM and Japanese automakers, Chrysler is more sensitive to reductions in demand for large vehicles because they make up a bigger proportion of its sales.
It is now launching the Dodge Ram truck, its biggest seller, in a severely depressed market for large pickups.
“The latest buyout offers reflect very weak auto sales this summer,” said analyst Gregg Lemos Stein at Standard & Poor’s rating agency.
“It’s very difficult for the automakers, obviously. They’ve had tremendous cash outflows despite their abilities to cut costs,” he said.
Privately owned Chrysler does not report quarterly earnings. But President Jim Press told reporters Thursday that the company was not far off the cash targets it had set at the start of the year.
He said Chrysler was “right-sizing” its operations and would reduce some overlapping models but also roll out new vehicles, including seven coming in 2010.
The automaker, owned by Cerberus Capital Management LP, said it had crafted a program of retirement, early-retirement and severance offers with the UAW and state of Michigan that included job retraining and placement assistance to soften the blow.
“We appreciate the years of dedication and work that the men and women of Chrysler have put into their careers with our organization,” Al Iacobelli, Chrysler vice president for employee relations, said in a statement. “We want to now provide them a chance to reinvest in and reinvent their next career.”
Chrysler said 13,800 workers, or nearly all the hourly workers in Michigan, are eligible for the offers that will be rolled out next week.
“We know that UAW members, with their total dedication to quality and productivity, can make valuable contributions in a wide range of fields,” said UAW Vice President General Holiefield, who directs the union’s Chrysler department.
The state will provide skill and aptitude assessments for Chrysler workers, career counseling, up to two years of training, and mentoring and coaching services through programs and initiatives such as “Michigan Works” and “No Worker Left Behind.”
“Providing workers with the training they need is a critical part of our plan to strengthen and diversify Michigan’s economy,” Gov. Jennifer Granholm said in the statement issued by Chrysler.
The “No Worker Left Behind” program provides up to two years of free tuition at any Michigan community college, university or other approved course. In addition, Chrysler will provide tuition assistance of up to $5,000 a year for two years, for a total of $10,000 per person, as part of a program similar to plans offered in the past by automakers scaling back their work forces.
The latest job reductions mark the fifth round of cuts at Chrysler in the past year and a half.
In February 2007, Chrysler embarked on its second major restructuring, entailing 13,000 job cuts, since its 1998 acquisition by the former Daimler-Benz AG. At the same time, Daimler disclosed that it was entertaining offers for Chrysler. It concluded the sale to Cerberus in August of 2007.
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