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Posted on Tue, Jan. 16, 2007

Chrysler prepares fiscal tuneup
Jobs may be cut; $1.3 billion loss for year expected
By Jim Mateja
Chicago Tribune

DETROIT - It's Chrysler's turn.

After posting a $1.26 billion loss through September and expecting a $1.3 billion loss for the year when it reports in a few weeks, the automaker is preparing to turn over a restructuring plan to the board of parent DaimlerChrysler late next month.

Speculation is that Chrysler might close one or two plants and perhaps eliminate several hundred additional jobs, to turn around its fortunes.
While Tom LaSorda, Chrysler Group's president and CEO, is mum on the details, he said in an interview at the Detroit Auto Show that he saw no reason to close lots of plants and eliminate thousands of jobs like Ford and General Motors have recently.

Been there, done that a few years ago, when Chrysler trimmed production and payrolls under the direction of then Chrysler CEO Dieter Zetsche.
That turnaround earned Zetsche the top job at the parent company in Germany, where he will be the one to review and approve LaSorda's proposal.
``In 2000-2001 we closed 13 plants, including components. We had 126,500 workers (hourly and salaried) and now are down to 82,500,'' LaSorda said.
``I won't say if we'll close a plant this time, but we're going to look at (excess) capacity. (Dropping) shifts could be a strategy, too. I've long said that with flex plants and a three-shift strategy we could go from three shifts to two shifts and idle a shift to bring production in line with sales rather than idle a plant.''

Still, analysts expect that won't be enough, with one plant, perhaps two, being shuttered.

The most likely candidate is the Newark, Del., plant that's basically on life support now as it assembles the slow-selling midsize Dodge Durango and Chrysler Aspen SUVs on only a single shift. Concerns are so high that a delegation from Delaware traveled to the Detroit Auto Show to plead their case, but LaSorda declined comment on a response.

Chrysler has a stamping plant in Twinsburg in Summit County.
``Chrysler has to continue to squeeze costs and that means buyouts,'' said Joe Phillippi, principal executive with AutoTrends. ``How many? Don't know. They've done it before, only this time it doesn't have to be as broad or deep,'' he said, and unlike GM and Ford, Chrysler doesn't have to help resolve the problems at parts suppliers Delphi or Visteon.

``GM is out of the swamp. Ford is standing halfway in and needs to get out, and Chrysler is standing with its feet on the bank of the swamp and needs to keep out and not get back in,'' added David Cole, chairman of the Center for Automotive Research. ``It needs new product, and it needs health-care concessions because health care still costs Chrysler about $600 per vehicle.''
Early last year, the UAW gave such concessions to Ford and GM, but cited earnings of $217 million in the first six months of the year in saying Chrysler was in too good of financial shape at the time to warrant help. That was before the third-quarter loss.

The UAW has since been reviewing the automaker's books to see whether it should reconsider. No word yet.

The worst-case scenario is that DaimlerChrysler will sell Chrysler to rid itself of a money loser, though most dismiss that.
``Dr. Z (Zetsche) has said he won't sell it and since he's the chairman, that's good news,'' LaSorda said.

Selling Chrysler also presupposes there would be a buyer, and like most observers, Jim Hall, a vice president with AutoPacific, said that's not likely.
``Who would want to buy it? Who needs it? Without Chrysler, Daimler's only global partners are Mercedes-Benz and Smart, neither major players in the U.S., so why would they want to sell it?'' Hall said.
The worst case for LaSorda, of course, is losing his job. But he remains a realist.

``Do I feel my job is in jeopardy? No. But I have to deliver and execute the restructuring plan and if I find that hard to do, well, you only get so many chances,'' he said.

The need to deliver became even more critical last Thursday, when Wolfgang Bernhard, former Chrysler chief operating officer who has been long rumored to be returning, stepped down as head of Volkswagen.

LaSorda also is attuned to the realities of the market. Growth in North America has reached the saturation point, LaSorda said.
``The long-term problem is that growth in the future is going to be outside North America, not inside of it, and sales will double in five years in countries like China and Russia and India.

``I'll go anywhere to make money, but I won't go anywhere to lose money.''

LINK: Akron Ohio Beacon Journal
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