November 2, 2007

Chrysler to cut jobs, drop four models to balance supply and demand

Auburn Hills, Michigan – Chrysler LLC has announced that it will cut up to 11,000 jobs, eliminate shifts and drop four models from its line-up, while adding two new products and new hybrid models through 2008.

Shifts will be eliminated at five North American assembly plants, which will lead to a reduction of between 8,500 and 10,000 hourly jobs. The company will also reduce salaried employment by 1,000 and supplemental contract employment by 37 per cent, and eliminate hourly and salaried overtime.

These volume-related actions are in addition to 13,000 jobs eliminated by the three-year Recovery and Transformation Plan (RTP) announced in February. The objectives of the RTP remain unchanged.

“The market situation has changed dramatically in the eight months since Chrysler established the Recovery and Transformation Plan as its blueprint,” says Bob Nardelli, Chairman and CEO. “Annual industry volume (in the U.S. market) then was running at a 17.2 million clip. Now, we expect a seasonally-adjusted annual volume for 2007 to be significantly lower and carry over into 2008.”

Vice Chairman and President Tom LaSorda says that third-shift operations at assembly plants usually reflect a high demand after a product is launched. Three of the five plants affected by this action are the result of elimination of third shifts in Beldivere, Illinois; Toledo, Ohio; and Brampton, Ontario. In contract negotiations just concluded with the United Auto Workers, Chrysler committed to spend more than US$15 billion on products, plants and engineering during the life of the contract through 2011.

The company will eliminate four models through 2008: the Dodge Magnum, the convertible version of the Chrysler PT Cruiser, the Chrysler Pacifica and Chrysler Crossfire. In the same timeframe, it will add the all-new Dodge Journey and Dodge Challenger, along with two new hybrid models, the Chrysler Aspen and Dodge Durango.

Among the plants affected are Brampton, Ontario, which builds the Chrysler 300, Dodge Charger and Dodge Challenger, along with the Magnum, and will lose its third shift; Belvidere, Illinois, which builds the Dodge Caliber, Jeep Patriot and Compass, and will lose its third shift; Jefferson North in Detroit, which builds the Jeep Grand Cherokee and Commander and will drop its second shift, although it is expected to return to two in 2010 with the introduction of the next generation of SUVs; Toledo, Ohio, which builds the Jeep Liberty and Dodge Nitro and will lose its third shift; and Sterling Heights, Michigan, which builds the Dodge Avenger and Chrysler Sebring sedans and convertible, and will lose its second shift. In addition, Mack Avenue Engine Plant II in Detroit will return to a traditional two-shift/two-crew operation in the first quarter of 2008, after operating on a three-crew/two-shift schedule. The plant builds the 3.7-litre V6 engine.

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