DISGRUNTLED SHAREHOLDERS ASK FOR SCHREMPP RESIGNATION
ZETSCHE'S COST CUTTING PLAN HITS SUPPLIERS
FORD AND DC IDLE MORE PLANTS
DELPHI ANNOUNCED LAYOFFS
NUMMI WILL STOP MAKING PRISM IN 2002
FORD RECALLS EXPLORERS
DAEWOO SAVED, NO RUSH TO COURT GM
ATTORNEYS FEAR FIRESTONE BANKRUPTCY
DC SLOWS DOWN, ADDS MORE LAYOFFS
ARIZONA FIXES COSTLY MISTAKE
NHTSA UPS FIRESTONE DEATH COUNT
SATURN FIRST FOR GM INTERNET SALES
VISTEON EARNINGS HURT BY INDUSTRY DOWNTURN
DC SENDS AMERICAN TO HYUNDAI BOARD
BIG THREE FORM ONLINE PARTS NETWORK
GM TO CUT PRODUCTION
DISGRUNTLED SHAREHOLDERS ASK FOR SCHREMPP RESIGNATION Even more disgruntled DaimlerChrysler shareholders have joined the fray, as the group Critical Shareholders DaimlerChrysler requested the resignation of chairman Jeurgen Schrempp. The group accuses the company chief of being responsible for $30 billion in lost share value. Furthermore, a member of the DaimlerChrysler supervisory board, Manfred Goebels, said that American executives withheld some critical financial data during negotiations in 1998, indicating that the German company wasn't aware of Chrysler's true financial state at the time of the "merger," according to an Associated Press report.
ZETSCHE'S COST CUTTING PLAN HITS SUPPLIERS Not wasting any time, new Chrysler group president and CEO Dieter Zetsche introduced a broad cost-cutting plan for the division. The plan asks suppliers to reduce prices by five percent effective January 1, and also requests that engineers, managers, and procurement people find a way to cut costs ten percent by 2002. Through two years, the plan should cut overall costs by nearly $6 billion. The Chrysler group currently buys about $40 billion in goods and services per year from suppliers. The only trouble with the plan is that most of the suppliers have hit hard times as well due to recent production downturns and idled plants, so they may not be so willing, or able, to follow Zetsche's request.
For a timeline of Chrysler's post-merger downward spiral, click here.
FORD AND DC IDLE MORE PLANTS After Ford and DaimlerChrysler reported continued sagging sales for November, both automakers plan to idle more assembly plants in the next month to tighten excess inventories. Ford Motor Company's overall U.S. vehicle sales fell by 7.2 percent in November, while DaimlerChrysler reported a five-percent drop in overall sales for its Chrysler division brands. Ford would not reveal which plants will be temporarily shut down, only that it would begin December 18. DaimlerChrysler plans to temporarily shut down six of its twelve U.S. and Canadian plants for a week, and a seventh for two weeks during December, to result in an overall 18.5-percent drop in production in the fourth quarter.
DELPHI ANNOUNCES LAYOFFS Supplier Delphi Automotive Systems has announced a temporary layoff of 1700 workers from plants in Michigan, New York, and Ohio. Affected workers will be notified throughout the month of December. The layoffs are in response to the general slowdown in U.S. auto production and numerous idled plants.
NUMMI WILL STOP MAKING PRIZM IN 2002 General Motors officials have confirmed that the joint-venture plant between General Motors and Toyota, called New United Motor Manufacturing, Inc. (NUMMI), will stop building the Chevrolet Prizm after the 2002 model year, according to Bloomberg News. At that time, the plant will produce a new-model Toyota Corolla and a new Pontiac "lifestyle vehicle" that will replace the Prizm but still share the Corolla platform. Toyota Tacoma trucks will still be built at the plant.
FORD RECALLS EXPLORERS Ford Motor Company is recalling about 876,000 Ford Explorer and Mercury Mountaineer SUVs for potentially defective suspension parts. The recall covers Explorers from the 1995 through 1997 model year and Mountaineers from the 1997 model year. Links that attach the front stabilizer bar can break, making the vehicle more difficult to control. Ford says that the problem is unrelated to the Firestone recall, which also affected the Explorer.
DAEWOO SAVED, NO RUSH TO COURT GM Daewoo Motor's court receivership application was approved last week, following the agreement by creditors to provide additional loans. The court has appointed a new chairman, Lee Jong-dae, who remarked to Reuters that the company now is in no hurry to rush negotiations with General Motors. The court receivership appoints new management for the company, guarantees the continued existence of the company, and orders a complete company restructuring and cost-cutting plan to take affect as soon as possible. Lee remarked that negotiations with GM are proceeding slowly. Daewoo had already planned to cut about 3500 jobs in October before operations were squelched last month due to lack of funds.
ATTORNEYS FEAR FIRESTONE BANKRUPTCY Tiremaker Bridgestone Firestone could be filing for bankruptcy if the damage claims adding up to nearly $50 million are won, according to USA Today. Attorneys on the case say that they have been trying to assure that any suits against the company would in turn go against Japanese parent company Bridgestone if U.S. arm Bridgestone Firestone declares bankruptcy. Bridgestone Firestone reports that overall consumer sales were down 40 percent during October and November, versus a year ago, and an exclusive supply deal with Ford has fallen through as a result of the recall. Bridgestone Corporation president Yoichiro Kaizaki later denied reports that the company's U.S. unit, Bridgestone Firestone might need to file bankruptcy. Kaizaki says that the company estimates about $450 million in damages related to the 6.5-million-tire recall, of which half is estimated to be spent on lawsuit settlements.
DC SLOWS DOWN, ADDS MORE LAYOFFS DaimlerChrysler has announced that it will cut production of its minivans by about 18 percent this week. The Windsor, Ontario, assembly plant that builds the vans will idle on Friday and produce about 6000 vehicles, versus the usual 7350 vehicles. The decision is demanded by excessive dealer inventories and sluggish sales, despite a redesign of the vans earlier this fall. Also, according to the United Auto Workers (UAW), DaimlerChrysler plans to lay off about 800 workers at the company's engine plant in Kenosha, Wisconsin, for three weeks. For one of those weeks, all 1500 workers will be laid off. The plant makes Jeep four- and six-cylinder engines and Chrysler V-6 engines.
ARIZONA FIXES COSTLY MISTAKE Arizona's state legislature has approved a new bill that greatly cuts the state's alternative-fuel vehicle subsidy program. The new bill would cut the yearly expenses of the program from $682.5 million down to $200 million, and apply to fewer vehicles. The original bill that authorized the subsidy passed on the stipulation that it would cost the state less than $10 million, however thousands of consumers took advantage of several loopholes in the ambiguously worded bill. In the original bill, vehicles didn't have to use the alternative fuels; they just had to be equipped to use them.
NHTSA UPS FIRESTONE DEATH COUNT The National Highway Traffic Safety Administration (NHTSA) updated its death figures for incidents related to Firestone tires. The recalled tires have now been linked 29 more deaths since the last count on October 17, to 148 deaths and 525 injuries. The NHTSA is still in the process of examining if the recall needs to be expanded to other tires in addition to the 6.5 million recalled. The agency has advised consumers that 1.4 million tires not covered by the recall pose a potential safety problem, although they would not be ordered recalled until the investigation is more conclusive.
SATURN FIRST FOR GM INTERNET SALES The Detroit News reports that GM's Saturn division plans to launch a direct-sales Web site where U.S. consumers would be able to purchase Saturn models at a slightly discounted price. GM has already tested the program in Brazil earlier this fall, with good consumer response. The cars are ordered over the Internet at a set price and are available for pickup at a desired dealership several days later. The company is using its Saturn division first for the direct sales because the division already has no-haggle pricing, whereas dealers in some other divisions want the haggling to be competitive.
VISTEON EARNINGS HURT BY INDUSTRY DOWNTURN Supplier Visteon Corporation announced that it will have lower-than-expected fourth-quarter earnings, due to production cutbacks from domestic automakers. While the company was originally expected by analysts to earn about 66 cents per share in the period, Visteon now expects to earn about 35 cents per share. Soon after the announcement, Visteon's share value fell by 22 percent, to its lowest value since being spun off from Ford Motor Company earlier this year.
DC SENDS AMERICAN TO HYUNDAI BOARD DaimlerChrysler has named Thomas Sidlik, an American and Chrysler Corp. veteran, to the Hyundai Motor Co. management board. Earlier this year, DaimlerChrysler bought a ten-percent stake in Hyundai, and the two companies are expected to produce joint-venture products,
first in the commercial truck sector.
BIG THREE FORM ONLINE PARTS NETWORK Ford, General Motors, and DaimlerChrysler, along with Bell & Howell, have announced a joint-venture parts and service Internet service. The network, similar to what Covisint does between manufacturers and suppliers, will control shipments of original equipment manufacturer (OEM) parts to dealerships and independent repair shops. Bell & Howell is the facilitating technology partner for the yet-unnamed venture. Company officials say that the service will allow faster, more reliable parts delivery and better customer service. The service will also allow the Big Three to keep a heavier hand over the parts market.
GM TO CUT PRODUCTION General Motors has announced that it plans to cut its estimated North American production through the first quarter of 2001, in order to clear massive inventories of unsold vehicles. More assembly plant cuts will follow, and although GM has not yet announced where the cuts will be, there are no plans to shut any plants in the next week. GM has set its first quarter 2001 production for only 1.301 million vehicles, versus 1.521 vehicles in first quarter 2000.