Weekly News: February 26, 2001

February 26, 2001

DC TO ANNOUNCE RESTRUCTURING Upcoming changes at DaimlerChrysler AG might include huge layoffs at Mitsubishi and more parts-sharing between Mercedes-Benz and Chrysler, according to reports. As part of the long-anticipated cost-cutting plan to be announced, DaimlerChrysler will appoint a new committee to oversee all of the company's divisions. Chrysler and Mitsubishi will probably share several platforms, and the Wall Street Journal also reported that the plan would include a review of the possibility of installing Mercedes-Benz engines in some DaimlerChrysler models.

Stay tuned to TCC for the latest info on the DaimlerChrysler announcements.


Korea's Daewoo Motor Co. laid off another 1751 workers on Friday, Feb. 16, after negotiations with the labor union failed to progress. With this last batch of layoffs, Daewoo held to its creditors' plan for the company to release nearly 5500 of its workers by that date. Creditors hope that the cuts will make Daewoo more attractive to potential foreign investors, including GM. In response to the layoffs, union workers declared a walkout strike, although the automaker's main Bupyong assembly plant remains temporarily shut down until March 6. Early last week, riot police were called in to control the protest when it became violent. Monday, about 4000 riot police were sent to contain the demonstrators, who later lit furniture and tires on fire. Also that day, seven Daewoo executives were arrested for their involvement in an illegal foreign-exchange borrowed-money fund that left backup money for Daewoo founder Kim Woo-choong. The violent protests continued Tuesday at Daewoo's main Bupyong plant, while family and friends of the workers joined in the demonstrations, aimed against the company and the local police. Police guarded entry into the Daewoo factory, and protesters launched firebombs in their direction. About 80 workers were detained by the police for their participation in violent acts. Later in the week, activists threw rocks and firebombs at police, and demonstrators protested the government's lack of involvement in the situation.


Mitsubishi's American arm has announced specifics of a recall of about 567,000 U.S. Mitsubishi models and 394,000 Chrysler models, affected by a safety recall issued by Mitsubishi in Japan. The recall, related to Mitsubishi's consumer-complaint cover-up scandal, involves a potential problem with premature ball-joint wear. DaimlerChrysler cars included in the recall include Chrysler Sebring and Dodge Avenger vehicles from the 1995 through 2000 model years. For questions regarding the recall, consumers may call Mitsubishi at 888-MITSU-2001, or Chrysler at 800-992-1997.

MORE JOIN LAWSUIT AGAINST FORD At least nine more Ford Motor Company employees are expected to join a class-action age-discrimination lawsuit against the company, according to the Detroit News. The lawsuit accuses Ford of attempting to replace older male workers through a job-review program that gave the older workers negative reviews, many without explanation. The review program coincided with a company program aimed at increasing the diversity of Ford's white- collar employees.

NHTSA INVESTIGATES WINDSTAR PROBLEM The National Highway Traffic Safety Administration has announced an investigation into a potential problem with defective front coil springs in Ford Windstar minivans. The agency has about 200 reports of broken springs so far, mostly occurring in cold-weather situations. Failure of the spring may puncture the tire, causing loss of vehicle control. Ford has not yet announced a recall on vehicles under investigation, about 925,000 1995 to 1998 model year Windstars.

DELPHI INCREASING LAYOFFS Supplier Delphi Automotive Systems is planning to temporarily lay off a total of 4200 hourly workers, up from 3692 this week. The scale of the layoffs has risen since General Motors and other automakers cut back on production in December.

FIRESTONE RECALLS ALTIMA TIRES Firestone has announced the recall of nearly 23,000 tires made as original equipment for 2000 and 2001 Nissan Altima SE models. The tiremaker found that the size P205/55R16 Firehawk GTA-02 tires, manufactured in Wilson, North Carolina, are prone to surface cracking. Tread separation is not a concern, according to Firestone, although exposure of the tire's steel belt could result after more wear. Firestone will replace the tires for free with the same-model tires, or with Bridgestone Potenza RE92 or Turanza EL41 tires of the same size. Other Altima trim levels were not fitted with the recalled tire.

EXECS JUMP FROM FORD TO CHRYSLER James Schroer has been named the Chrysler Group's new executive vice president of global sales and marketing, replacing outgoing marketing chief Bud Liebler, who is taking an early retirement. Schroer has been the head of global marketing at Ford Motor Company since June 1999. Also making the move from Ford to Chrysler is George Murphy, who will take the roll of senior vice president, global brand marketing.

GM EXPANDS PRODUCTION CUTS General Motors has announced plans to idle 14 of its 29 North American plants through the first half of the year. The automaker will idle each of the plants for one to five weeks at a time, to cut total vehicle production by 21 percent over the first three months of the year. Total production cuts in the second quarter of the year have not yet been announced. General Motors is also planning to permanently cut production at its Lake Orion, Michigan, plant by nearly 25 percent later this spring. The cut could result in nearly 1000 additional layoffs. The plant produces the Buick LeSabre, Buick Park Avenue, Oldsmobile Aurora, and Pontiac Bonneville.

PLANS CHANGE FOR NEW GM FACTORY General Motors is now planning to build a new family of trucks, rather than midsize cars, at its upcoming $1 billion Delta Township, Michigan assembly facility, according to the Detroit News. The trucks are suspected to be based on an upcoming platform that will offer car-like handling on a truck chassis. The new assembly plant is expected to open by 2004.

COUNTERCLAIM LAUNCHED AGAINST SHELBY AMERICAN Superformance International has launched counterclaims against Cobra manufacturer Shelby American, claiming that Caroll Shelby does not hold any rights that would prevent the making of replicas of the original Cobra. The company claims that Shelby relinquished his rights to the name by not taking action against the dozens of companies that have used the Cobra name after production of the original halted in 1967. Several weeks ago, Shelby American filed its second lawsuit that alleges trademark infringement--the first was launched against replica maker Factory Five last year. Superformance's counter claim attests that the lawsuit against Superformance, which seeks more than $10 million, is invalid and should be cancelled.

GM AND AUTOBYTEL PARTNER General Motors is partnering with the online vehicle sales site Autobytel.com, in a 90-day test aimed at determining consumers' preferences for e-commerce sites. Through the Autobytel partnership, visitors to the site will be able to check inventories at nearby GM dealerships, along with the invoice price and selling price. GM will use information obtained from the partnership for its joint-venture company called AutoCentric.

GM BACKS AWAY FROM FIRESTONE General Motors has decided to drop Firestone tires this summer on some of its 2002 cars and trucks, according to the Detroit News. Although GM will not entirely drop Firestone tires from its lineup, Bridgestone models will definitely replace the Firestone tires currently standard on Cadillac and Saab models, and the trend may follow on other models. Bridgestone Firestone would not comment on whether the changes had anything to do with last year's Firestone recall, or a recent recall of Firestone tires on Nissan Altimas. On another note, Bridgestone Firestone announced that its net profit plunged about 80 percent last year due to the recall.

DC BORROWS MONEY DaimlerChrysler has revealed that it has filed to borrow up to $30 billion for "general corporate purposes," according to CNNfn. The company will reveal its restructuring plan next week, and officials had previously revealed that the company has almost no cash reserves.

AUTOMAKERS REFOCUS LOBBY EFFORT Thirteen automakers agreed to stop blocking federal fuel-economy standards and refocus their lobbying efforts toward getting tax credits for buyers of fuel-efficient vehicles. Environmental and safety groups expressed concern that the tax credits will not necessarily lead to a higher average fuel economy. The automakers, members of the powerful Alliance of Automobile Manufacturers, want the market, and marketing, to drive the consumer vehicle purchases. Ford Motor Company surprised environmentalists earlier in the week by declaring that a rise in Corporate Average Fuel Economy (CAFE) standards might be acceptable to the company. CAFE supporters say that the standards have saved the nation about 3 million barrels of oil per day. The National Academy of Sciences is expected to present its recommendations on raising the CAFE by July 1, although environmentalists say that with George W. Bush as president, the CAFE has a very slim chance of facing any immediate changes.


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