DaimlerChrysler's U.S. Job Cuts Set, WSJ Report Says (Update4) By Bret Okeson

Auburn Hills, Michigan, Jan. 29 (Bloomberg) --DaimlerChrysler AG is expected to cut about 25,000 jobs, or a fifth of its U.S. workforce, in a move that will idle at least three factories, the Wall Street Journal reported, citing unidentified people familiar with the matter.

DaimlerChrysler, the world's fifth-largest automaker, said it will hold a press briefing at its Auburn Hills, Michigan, headquarters today at 8:30 a.m. local time. The Journal said the carmaker will cut 20,000 manufacturing and 5,000 white-collar jobs at its Chrysler unit. DaimlerChrysler spokesman Ken Levy declined to comment on the job cuts.

Chrysler lost an estimated $1.75 billion in the U.S. in the second half of 2000 because of discounting, gains by rivals such as Toyota Motor Corp. and the introduction of redesigned minivans. The company has said it expects additional, unspecified costs this year as it tries to bring Chrysler back to profit.

``There's a danger DaimlerChrysler will slash and burn to cut costs,'' said Juergen Pieper, an analyst at Bankhaus Metzler. ``Ford and Opel are in trouble in Europe because they just have cost-cutting policies and no growth strategy. That leads to a downward spiral.''

Ford and GM have responded to losses in Europe by closing factories and cutting costs in product development as the image and sales of both companies eroded. Pieper said DaimlerChrysler was risking the same outcome in the U.S.

The reorganization would be the first major move since Chief Executive Juergen Schrempp dispatched Zetsche to Michigan in November, charging him with the responsibility of turning around the unit.

The factory workforce cutbacks would be phased in over three years and some plants would be scaled back to two shifts instead of three, the Journal reported.

North American Closures

The German magazine Spiegel reported 21,000 jobs would be cut at Chrysler and 4 factories would be closed. The factories affected will be in the U.S. Mexico, Brazil and Canada, the magazine said, without citing sources. Even with these measures, Chrysler will not be profitable until 2004, the magazine reported.

``Cutting staff would be a move in the right direction, but only if the cuts are made in an intelligent way,'' said Albrecht Denninghoff, an analyst at HypoVereinsbank. ``There has to be a detailed plan for it to make sense.''

DaimlerChrysler has said it would present its plan to return Chrysler to profit at the end of February at the annual earnings press conference. Denninghoff said the company may have moved the date up because it had an agreement with its unions over the weekend on the job losses.

The company will try to reduce the white-collar positions through early retirement plans, the Journal said.

Schrempp and Zetsche have vowed to have a plan in place by the time DaimlerChrysler reports earnings in late February. For Schrempp, it's the latest effort to make good on the merger he co- engineered in 1998, when his Daimler-Benz AG bought Chrysler Corp. for about $35 billion.

Investors have pushed DaimlerChrysler's U.S. shares down 42 percent since the merger in November 1998, while the German shares have lost 21 percent of their value.

DaimlerChrysler fell as much as 0.31 euro, 0.59 percent, to 52.2 euros.

-- kevin (ktross@mailcity.com), January 29, 2001

Answers

CBC

Mon Jan 29, 2:55 am

DaimlerChrysler to announce massive cuts

In a move that could hurt the economy of Ontario, DaimlerChrysler is expected to announce on Monday it is cutting 2,800 jobs in Canada, and scrapping its plans for an expansion in Windsor.

Reports in two major newspapers say the Canadian cuts are part of a plant to reduce the company's North American workforce by 23,000.

The company is also expected to announce it will abandon its plans for an expansion of its Windsor operation. That project had been expected to be worth $1.5 billion.

The auto market has been cruising at near-record levels for some time, but DaimlerChrysler reported huge losses in the third quarter of last year.

Company officials have so far not commented on the reports, but a press briefing is scheduled for Monday.

Union officials wouldn't comment on the details of reductions, but did say major cuts were expected. They also hoped layoffs could be limited by measures such as early retirement packages and buyouts.

The cuts represent more than 20 per cent of DaimlerChrysler Canada's workforce, and could expand by another 1,200 if it closes its commercial van plant in two years.

The cuts include:

eliminating a third shift – or 1,200 jobs – at the assembly plant in Brampton, Ont. in June eliminating 900 jobs at the commercial van plant in Windsor, Ont. in July reducing 425 jobs at the Windsor minivan complex in a production slowdown to be implemented by July a reduction of about 210 jobs a parts plants in Ajax and Etobicoke in April.

The economy in southern Ontario will feel the effects of the cuts, as about one in six jobs is connected in some way to the auto industry. The reduction in output at DaimlerChrysler plants will impact other segments of the industry which supply parts and could trigger waves of layoffs.

Blaming lower consumer demand, the company announced losses of $512 million in the third quarter last year.

A periodically troubled company for the past two decades, merged with German automaker Daimler Benz in 1998.

-- Rachel Gibson (rgibson@hotmail.com), January 29, 2001.