US automaker Chrysler to slash thousands of jobs

01 November 2007 22:52  [Source: ICIS news]

HOUSTON (ICIS news)--US automaker Chrysler said on Thursday slash as many as 11,000 jobs in North America through 2008 in order to cope with a shrinking market.

The move is significant for the petrochemicals and plastics industries as North American vehicles contain an average of about $2,200 (€1,518) in chemicals, according to the American Chemistry Council (ACC).

A reduction in US car production could also mean a drop in demand for chemicals.

Each vehicle has an average of 335 lb (152 kg) of polymers, according to the ACC.

Chrysler said it would make volume-related reductions at several of its North American assembly and powertrain plants, and eliminate four products from its line-up.

“Shifts will be eliminated at five North American assembly plants which, combined with other volume-related manufacturing actions, will lead to a reduction of 8,500-10,000 additional hourly jobs through 2008,” the company said in a statement.

“Additional actions include reductions of salaried employment by 1,000 and supplemental (contract) employment by 37%,” Chrysler said. “The company also plans to eliminate hourly and salaried overtime and reduce purchased services due to reduction in volume.”

The cuts are in addition to the elimination of 13,000 jobs announced in February. The objectives of the RTP remain the same.

Chrysler will have around 59,000 employees when the two rounds of cuts are completed, according to news media reports.

 “The market situation has changed dramatically” since the February announcement, said Bob Nardelli, chairman and chief executive. “Annual industry volume (US market) then was running at a 17.2m [vehicle] clip. Now, we expect a seasonally adjusted annual volume for 2007 to be significantly lower and carry over into 2008."

Chrysler said in contract negotiations just concluded with the United Auto Workers, the company committed to spending more than $15bn on products, plants and engineering during the life of the contract through 2011.

Thursday’s announcement came after Cerberus Capital Management bought the third-largest US automaker in August. The cuts also come after a labour contract was reached with the United Auto Workers union.

By: Brian Ford
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