Weekly News: Jan. 29, 2001

January 22, 2001

DC PLAN MAY CLOSE PLANTS, CUT 20,000 JOBS DaimlerChrysler's soon-to-be-announced restructuring plan could involve cutting more than 20,000 jobs over time, according to a Wall Street Journal Europe report. The report, based on insider speculation, also suggests that the company might close up to six Chrysler Group assembly plants, most likely including those plants that have been idled often in past weeks. The plan may include ending production of some models. DaimlerChrysler plans to unveil the cost-cutting restructuring plan on February 26.

GERMAN APPOINTED TO MITSUBISHI BOARD Mitsubishi Motors shareholders have approved the appointment of the company's chief operating officer, Rolf Eckrodt, as a member of Mitsubishi's governing board. Eckrodt, a former DaimlerChrysler executive, was appointed to the Mitsubishi position shortly after DaimlerChrysler increased its stake in Mitsubishi to 34 percent. The two automakers are in the process of merging some operations, and as a result there will likely be more platform and engine sharing, between Mitsubishi and the Chrysler division.

CA POWER CRISIS MAY SOON BE A FUEL CRISIS The power crisis that has caused intermittent blackouts for many areas in California is now also threatening to affect California's gasoline and fuel supplies. The blackouts have caused the state's main gasoline pipeline to be shut down for more than ten hours for three straight days, according to reports. The state's Public Utilities Commission has denied an appeal to except the pipeline operations from electric service operations. The interruptions will probably boost pump prices, and the possibility of a fuel shortage will emerge if the blackouts continue into this week.

NISSAN CHOOSES ENGLAND Nissan has decided to assemble the next-generation Micra minicar in Sunderland, England, ending months of speculation that the plant might be closed and production might be moved elsewhere, due to the strength of the British pound against the euro. A 40-million-pound incentive package surely aided the company's decision to keep the operation in the U.K. The plant will begin making the new Micra, which shares a common platform with Renault, in late 2002, and production will eventually rise to about 500,000.

DELPHI AND VISTEON ANNOUNCE TEMPORARY LAYOFFS Major automotive suppliers Delphi Automotive Systems and Visteon Corporation both announced Monday that they will temporarily lay off thousands of workers. Visteon will idle plants in Indiana, Michigan, and Ohio, idling about 6000 workers, while Delphi is idling 4300 workers in plants in Ohio, Indiana, Michigan, and New York. Delphi and Visteon still rely on former parent companies General Motors and Ford, respectively, for a significant portion of their business, and both of the automakers have idled production due to the industry slowdown.

KERKORIAN PARTS WITH DC SHARES Kirk Kerkorian, the billionaire investor and DaimlerChrysler's third-largest stockholder, has cut his stake in the company by a third, cutting his ownership of DC from 3.3 percent to 2.3 percent. Kerkorian currently has a pending $8 billion lawsuit against the company, alleging that DaimlerChrysler deceived Chrysler shareholders in the 1998 "merger of equals."

GROUPS PROTEST AUTO INDUSTRY MERCURY USE Several earth-conscious groups, including Environmental Defense, the Ecology Center, and Great Lakes United, are protesting the continued use of mercury in automobiles. Mercury is highly toxic to humans and wildlife and is released into the ground or air when vehicles are scrapped or incinerated. The groups are protesting the continued use of mercury switches in anti-lock braking systems and in lighting controls. According to the groups, BMW, Toyota, and Volvo have completely eliminated mercury switches.

AUTOTRADER GETS EXCLUSIVE WITH AOL AutoTrader.com has reached a three-year agreement with America Online, according to Automotive News. The agreement allows AutoTrader to be the exclusive advertiser for used-car classifieds on AOL. The deal is worth significantly more than the $8.5 million per year that AutoTrader already pays for AOL exposure.

NEW EPA CHIEF VOICES MTBE CONCERNS President Bush's choice to head the EPA, New Jersey governor Christie Todd Whitman, has declared MTBE contamination as one of her first concerns. MTBE, commonly used as an additive in newer, reformulated "clean-air" gasolines, has been linked with groundwater contamination in several states, including New Jersey. MTBE is used by refineries in many markets as a cheaper alternative to ethanol and other less-harmful additives that can be used to achieve similar air-pollution standards.

GM TRUCKS RECALLED FOR BRAKE DEFECT The National Highway Traffic Safety Administration (NHTSA) has forced a recall of nearly 1.4 million General Motors light trucks and SUVs for a potential problem with the design of the brake line, which can become damaged next to the adjacent vehicle frame member. Affected vehicles include Chevrolet Tahoe models and GMC Yukon and Yukon XL models from the 2000 model year, and Chevrolet Silverado and GMC Sierra models from the 1999 and 2000 model years. GM says that it had already started to voluntarily correct the problem.

METAL PARTS SUPPLIERS MERGE Three smaller automotive suppliers, MascoTech, Simpson Industries, and Global Metal Technologies, have merged into one privately held company called Metaldyne. Metaldyne will seek to be a major supplier for metal-formed parts. No initial job cuts will result from the merger. In the past six months, the companies have been purchased by investment group Heartland Industrial Partners.

TEXTRON ANNOUNCES GLOBAL CUTS Rhode Island-based automotive and aircraft supplier Textron has announced a plan to cut 3600 jobs with the closure and consolidation of several manufacturing sites. In the U.S., plants in Racine, Wisconsin, and Naples, Florida, will close entirely, and globally, plants will be shuttered in England and France. The cuts are expected to save more than $100 million beginning in 2002. 

OLDS DEALERS PROTEST Oldsmobile dealers, displeased with the "transition" compensation packages offered by General Motors for the loss of business due to the phaseout of Oldsmobile, are suggesting that a legal battle for compensation may result, according to the Detroit News. Dealers say that GM's buyout offer, which is proportional to the number of vehicles each dealership sells per year, does not include recent facilities improvements. Also, Oldsmobile-only dealerships seek additional compensation due to the total loss of business.

CARB SAYS ZEVS STAY The California Air Resources Board (CARB) -- the regulatory body that automakers the world over fear the most -- will keep the state's zero-emission vehicle rules in place, although they will be watered down before a 2003 deadline. For more on the story, click here.

COVISINT FORMS BOARD The newly formed Covisint online parts exchange has elected twelve members to its first board of directors, which will have seventeen members. The board members include high-ranking officials from automakers and suppliers. The five remaining board members, soon to be named, will include representatives from non-automotive disciplines, according to a Covisint announcement.

GM WORKERS PROTEST IN EUROPE More than 30,000 General Motors workers in Europe staged walkouts and protests against the automakers plan to cut nearly 5000 jobs in the region. The walkouts reduced the company's daily vehicle output by 12 percent in Europe. More walkouts in England, in protest of the company's plans to close assembly operations in Luton, were to be scheduled over a 24-hour period Thursday, costing the plant a full day of production. General Motors said that it has no plans to reverse the decision to close the Luton plant, which currently assembles Vauxhall Vectra models.

UNEASY DC WHITE-COLLARS JOIN UNION To the surprise of many, about 360 DaimlerChrysler white-collar employees have voted to join the United Auto Workers. The move, reported by the Detroit News, is representative of job security and pay and benefits issues that concern many DC workers, who suspect that their jobs might be targeted by impending widespread company cuts. Although the workers are currently not under a contract, union membership will enable the workers to use union negotiators for future contracts.

GM, FORD EXTEND IDLE TIME General Motors and Ford have extended idle time at various North American plants, due to still-bloated inventories. General Motors has added one more plant, its assembly operation in Hamtramck, Michigan. General Motors is currently idling five plants, affecting 14,400 workers, while Ford is idling two, affecting 4150 workers.

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