Chrysler Layoffs Not Imminent, Chief Says
DaimlerChrysler said Friday that it needs more time to establish the extent of restructuring at its ailing U.S. unit Chrysler and that it will not announce any job cuts in the next few days.
DaimlerChrysler Chief Executive Juergen Schrempp also rejected suggestions that the 1998 merger of Daimler-Benz and Chrysler Corp. should be undone by putting the U.S. operations on the block.
Asked whether selling Chrysler is the best solution for the auto maker, Schrempp told the Bild newspaper: “Rubbish. That isn’t under discussion at all.”
He said that the first effects of restructuring at Chrysler would be seen in a year and that he is confident DaimlerChrysler will emerge stronger from the crisis.
“After 12 months, we will have the first concrete results in America,” he was quoted as saying.
Chrysler, which once boasted of the highest profit per vehicle of any of the U.S. Big 3 auto makers, lost $512 million in the third quarter. Earnings have been hit by a downturn in the U.S. car market, the high costs of introducing new models and inflated discounts on old models that are hard to sell.
Analysts expect further losses in the fourth quarter, and the group has said it is unclear when Chrysler would return to profit.
A spokesman for the company said earlier that any job cuts at Chrysler would be part of a broader restructuring program aimed at stemming losses and restoring investor confidence in DaimlerChrysler.
The company’s shares gained $1.15 to close at $40.23 on Friday on the New York Stock Exchange. That’s above Tuesday’s 52-week low of $37.90 but still off 48% year to date.
“We won’t be making a statement on job cuts at Chrysler in the next few days,” the spokesman said. “That can’t be done at a stroke.”
His comments followed remarks made to Reuters on Thursday by DaimlerChrysler Chief Financial Officer Manfred Gentz that job cuts were possible and that a statement should be released as soon as possible, maybe within days.
Chrysler Chief Executive Dieter Zetsche, who replaced James P. Holden on Nov. 17 as part of sweeping management changes aimed at reviving the U.S. unit, has begun working on the restructuring plan, which is due to be completed in the first quarter of 2001.
Later Friday, DaimlerChrysler issued a statement saying Gentz was quoted inaccurately but acknowledged that “employment levels” and plant utilization were under review at Chrysler.
Company sources said extensive personnel changes would require negotiations with the United Auto Workers union, which represents 76,000 hourly workers at Chrysler’s U.S. plants, but that temporary shutdowns of assembly plants were more straightforward.
Under terms of a 1999 agreement with the UAW that runs until 2003, plants can be shut for up to 42 weeks. Workers would receive 95% of pay, some of it being provided by state unemployment benefits.
