Huge Chrysler Layoff Reported

Chrysler plans to lay off about 3,500 salaried employees in a bid to cut costs after its $1.6-billion takeover of American Motors, company sources told Reuters on Monday.

The nation’s third-largest automaker, which earlier this year imposed a hiring freeze, is expected to announce the cutbacks Tuesday morning at a news conference given by chairman Lee Iacocca, the sources said.

The layoffs are expected to affect about 9% of the company’s salaried employees, the sources said.

The plan calls for a separation program under which the employees would be laid off at a rate of 3% annually for three years, the sources added.

Chrysler currently has about 38,000 salaried employees, including some 5,800 who were added when the company bought AMC in early August.

Chrysler is also due to report its third-quarter earnings, which some Wall Street analysts said could be disappointing.