Chrysler Losses Lead to Workforce Reduction

DaimlerChrysler has experienced for the past years much woe as they continually lose market share to Asian car manufacturers. The company now is down as the fourth largest car manufacturer in the US. This slump prompted the company to reduce its workforce by as much as 9,000 factory workers in the US and 2,000 more on their Canada plant.

The company also plans to close down one of its assembly plants as a result of the slump that they are experiencing. The 11,000 employees that will be laid off represent 16 percent of the company’s total workforce in North America. In addition to that, the company also plans to layoff as many as 2,000 of their paid staff over the next two years.

Aside from the reduction of their workforce, the company is also planning to close down their SUV assembly plant which is located in Newark, Delaware. The proposed closing of the plant will be implemented by the year 2009. The shut down of the plant will start with the elimination of one of the two shifts at the said assembly line. This will take place later this year.

Another plant that will suffer a reduction in the number of shifts is the truck assembly line of the company in Warren, Michigan. Their St. Louis assembly plant will also suffer the same fate next year. The planned downsizing of the company is an effort to reduce production costs.

In connection with these, DaimlerChrysler will also close down a parts distribution center in Cleveland come December this year. To further reduce the production costs, the company will also adjust powertrain, stamping and component operations which would exhibit reduced capacity. Outsourcing is also another strategy that the company is looking at. They will aim to delegate some of their non-core operations to an external company that specializes on the management of operation in question.

Another step being taken by the company to keep in check their slide is the development of more cars that will be coming as fuel efficient units. This is to address the increasing demand for such cars. The company further stated that they would move away from traditional emphasis on the North American market.

The efforts by the company to cut down their production costs and return to a profitable standing will reduce their production capacity. DaimlerChrysler’s vehicle production will be reduced by as much as 400,000 units every year. If the plan works out perfectly, the company hopes to make profits rise up again as soon as the year 2008 comes around. The projected return to profitability is much faster than its domestic rival that is the Ford Motor Company. The Dearborn-based car maker stated that they expect to make profits by the year 2009. That is, of course, if their turnaround plan works to perfection like a Ford Racing cold air intake component does. Another US car manufacturer and still the reigning largest car manufacturer in the US, General Motors, has yet to announce when they expect to post profits.

The planned reduction of the company in terms of their workforce will take effect in the later part of this year. As much as half of the planned hourly jobs to be cut will be implemented towards the end of the year. The proposed reduction in the workforce of DaimlerChrysler is lower than the jobs eliminated by Ford Motor Company and General Motors. Both companies laid off as many as 30,000 employees in their effort to cut their production and operational costs.

DaimlerChrysler said that they will offer “special retirement programs and other termination and attrition programs” to workers who will be affected by the workforce reduction.