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Headlight News Weekly for November 27, 2000

November 27, 2000



CHRYSLER SHAKEUP DaimlerChrysler AG last week replaced Chrysler operations president James Holden with Dieter Zetsche, a top executive in DaimlerChrysler's commercial vehicles unit. Wolfgang Bernhard, of Mercedes-Benz's AMG performance group, will be appointed as Chrysler's new chief operating officer. DaimlerChrysler is hoping that the two new top executives will be able to turn around the ongoing losses at the Chrysler division. Following the announcement, three more executives have left DaimlerChrysler, likely in response to the management changes announced by the company last week. Chief administrative officer Kathleen Oswald and Theodore Cunningham, DC's vice president of global sales and marketing for Chrysler, both announced their retirement effective immediately, and Tony Cervone was forced out of his position as vice president, communications. Cervone had only recently returned to DaimlerChrysler from a position at General Motors.
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GM AND DC IDLE PLANTS Both General Motors and Chrysler have announced that they will idle some plants in the next few weeks due to excessive inventories. GM plans to idle 6100 workers at assembly plants in Janesville, Wisconsin, Shreveport, Louisiana, Wentzville, Missouri, and St. Therese, Quebec. DaimlerChrysler will idle 3100 workers at its Belvidere, Illinois, plant this week, and it will also idle several North American plants next week due to excess inventories. The plants to be idled are in Bramalea, Ontario (Chrysler 300M, Concorde, and LHS), Jefferson North in Detroit (Jeep Grand Cherokee), and Toledo, Ohio (Jeep Cherokee and Wrangler). The temporary shutdown affects about 13,600 workers.
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BRIDGESTONE FIRESTONE LAYOFFS Bridgestone Firestone has decided to temporarily lay off 1100 workers starting in January, mainly due to falling U.S. sales from the massive Firestone recall. The company reports an oversupply of most passenger car and light truck tires. The plants that are scheduled for production cuts are those in LaVergne, Tennessee, Oklahoma City, and Warren County, Tennessee. The company has already laid off about 450 workers at the Decatur, Illinois, plant where most of the 6.5 million recalled tires were made.
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MAZDA MOVES PRODUCTION TO EUROPE Mazda Motor Corporation has announced that it will cut about one fourth of its manufacturing capacity in Japan, in favor of launching new production efforts in Europe. The changes will mean about 1800 lost jobs at Mazda's facilities in Japan. The movement toward production in Europe will enable Mazda to establish a stronger presence in the European market and cut its losses due to trading against a weak euro. Mazda plans to make about 100,000 cars per year at an existing Ford plant in Europe. Although the site has not been finalized, most likely locations are in Germany, Belgium, or Spain.
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DAEWOO PRESIDENT APPEALS TO UNIONS Daewoo's current president, Kim Dae-jung, has warned labor unions that the car company will not survive if the unions will not accept layoffs. Daewoo declared bankruptcy on November 8 after the labor union rejected a plan that would cut more than 3000 workers. Daewoo Motor has applied for court receivership, although officials anticipated that the receivership will not be granted. The president has made an appeal to the workers that any layoffs would be reversed as soon as the company is prosperous again.
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STATES AGREE WITH CA DIESEL RULES Thirteen more states have announced intentions to join California in enforcing strict new emissions requirements for heavy-duty diesel trucks registered in the states. The requirements would go into effect in 2005, two years sooner than a similar federal law goes into effect. The states, mainly in the northeast, jointly announced their intentions to close the "emissions loophole" for big trucks. The new rules will especially crack down on the most noticeable sooty particulate matter that trucks emit.
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NHTSA OPENS INVESTIGATION INTO GOODYEAR TIRES The National Highway Traffic Safety Administration (NHTSA) has opened a preliminary investigation into tread-separation problems with Goodyear Load Range E tires. The agency has received reports of 31 crashes and 15 deaths attributed to failure of the tires. Goodyear claims that it has already completed its own investigation of the tires, and concluded that all of the incidents were caused by overloading, road debris, or improper tire maintenance. About half of the tires included in the investigation were sold as original equipment on Ford and Dodge heavy-duty trucks and other commercial models.
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JEEP WILL KEEP CHEROKEE DaimlerChrysler AG has announced that it plans to sell the new Jeep Liberty mid-size SUV alongside the Jeep Cherokee, the vehicle that the Liberty was originally intended to replace. The Liberty will be built in Toledo, Ohio, along with the Cherokee and Wrangler.
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FORD AND VISTEON BABYSIT Ford Motor Company and Visteon have announced that their employees will be able to get onsite child care at new family centers to be built near the companies' facilities around the U.S. Over the next few years, the companies, in cooperation with the United Auto Workers, will open 30 centers in 14 states. The centers, which will each provide care for about 220 children, will also include tutoring and health-screening services. The child-care service will demand a fee, although some of the services will be free.
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DC STOCK DIVES According to a Detroit News report, DaimlerChrysler's stock hit an all-time low Monday, despite the appointment of Dieter Zetsche as the Chrysler Group's new president. DCX stock closed at $40.10 on Monday, and slid even lower on Tuesday, to $38.85. Since January 1999, when the company's stock hit a record high of $108, Monday's price represents a total loss of value of $68 billion. U.S. investors currently hold only 20 percent of outstanding company shares, versus 44 percent at the time of the "merger."
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DAEWOO SUPPLIERS SUFFER Several of Daewoo Motor Co.'s first-tier suppliers may become insolvent if the Korean courts fail to resolve Daewoo's bankruptcy situation. According to various sources, most at risk is Korea Delphi Automotive Systems, a joint venture between Daewoo Motor and Delphi Automotive Systems. Four of Daewoo's cooperatively run suppliers have already encountered financial trouble. Daewoo has made a final appeal to Korea Development Bank, although the chances of the bank granting an additional loan, or the Korean courts placing the company in receivership, are slim.
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ZETSCHE TO PHASE OUT INCENTIVES New Chrysler Group chief Dieter Zetsche sent out an e-mail to employees saying that they "don't have much time to fix things," according to a Wall Street Journal report. Zetsche addressed employees and dealers on the building of the Chrysler brand, saying that selling vehicles on the cheap will not build the brand's image. Recent financing incentives and rebates of up to $4000 on some models are expected to be phased out under Zetsche's rule, which will undoubtedly make dealers unhappy.
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SLATER REVEALS CHILD-SAFETY PLAN U.S. Transportation Secretary Rodney Slater Wednesday revealed a new Child Restraint Safety Plan. The plan outlines more than 30 activities that would lead to better protection of children ten years old and younger. Included in the plan is a proposal that would include child safety seats in car crash testing and the development of a ten-year-old-size dummy. The plan also includes a review of the agency's policies on child seats, and the publishing of a guide and other consumer information.
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