Weekly News: March 12, 2001

March 11, 2001

DC WILL LAYOFF 2700 SALARIED EMPLOYEES

DaimlerChrysler announced that it plans to permanently lay off about 2700 salaried workers by the end of March. Company officials call the layoffs a step toward achieving the turnaround-plan goal of cutting 5000 white-collar workers. Nearly 2300 Chrysler Group salaried workers have taken advantage of the company's offered early retirement plan. Most of the workers who will be laid off will receive a severance package.

MITSUBISHI TO REPORT LARGER LOSS

Japan’s Mitsubishi Motors is now anticipating a loss of 2.1 billion-nearly twice as large as previously expected, according to Japan’s Nihon Keizai and other sources. The additional loss includes additional money spent to recover from the company’s scandal, in which Mitsubishi last year admitted to covering up consumer complaints for more than twenty years. Mitsubishi has not yet made a public statement regarding the higher losses.

FIRESTONE SETTLES TEXAS CASES

Bridgestone Firestone has settled 26 of its lawsuits filed by accident victims attributing their accidents to tread separation on Firestone tires. While the terms of the settlements were not revealed, most of the cases, represented by Houston law firm Houssiere, Durant, and Houssiere, involved Texans.

BELT FAILURE SIMILAR TO EARNHARDT'S

David Hutchins, a ProStock driver, has filed a lawsuit against Simpson Performance Products, alleging that the failure of a Simpson Cam Lock 5-Way Driver Restraint System led to serious injuries in a crash last summer. The racing harness that failed was similar to the one used by Dale Earnhardt in his fatal crash. The lawsuit seeks $2 million in damages.

KOREAN LABOR GROUPS PLAN BLOCKADE

Angry Korean labor groups demonstrated at Daewoo's main Bupyong assembly plant, in protest of the company's 1751 layoffs on February 16. The layoffs were carried out on the request of creditors, who want to make the company attractive to potential foreign buyers. Daewoo shut down the main plant just after the layoffs. Protestors say the shutdown was a ploy to avoid confrontation with the workers, while Daewoo says it was simply to reduce inventories. Daewoo Motor Company has since reopened its main assembly plant, and police continued to block demonstrators' access.

FORD COMPLETES HERTZ PURCHASE

Ford Motor Company has completed its $710 million purchase of the remaining shares of rental-car company Hertz, soon to be a wholly owned subsidiary of Ford. When Ford announced its offer last September, the automaker owned about 81.5 percent of the rental-car company's outstanding shares.

GAS PRICES AT A LOW, FOR NOW

The U.S. Energy Department reported fuel prices down 8.4 percent from a year ago, to an average pump price of $1.417 per gallon, the lowest price so far this year. Prices were lowest in the Gulf Coast and Midwest regions, while prices remained highest in the West Coast states. Despite the low prices, USA Today predicted that gas prices could rise as high as $2.50 per gallon in some regions this summer. The report predicts that areas being required to sell a new "clean-air" summer-blend gasoline for the first time could be hit hardest. Areas included would be Chicago, Milwaukee, St. Louis, Houston, and Dallas. Any problem with refineries or pipelines could make the reformulated fuel expensive and in short supply.

DC EXECS DETERMINING PARTS-SHARING

Top-ranking DaimlerChrysler executives met in Germany last week to begin determining the extent of platform and parts sharing between Chrysler and Mitsubishi. The Chrysler restructuring plan is likely to include the sharing of a small-car with Mitsubishi and components from larger vehicles with Mercedes-Benz. The new automotive council is reportedly in the process of determining the specifics of the parts sharing.

SMALL HUMMER WILL HAVE SUSPENSION ELECTRONICS

American Axle is readying production of new electronically actuated stabilizer bars for the upcoming 2003 Hummer H2 model, according to Automotive News. The so-called SmartBar can be switched 'off' for off-road driving, while in its rigid, 'on' mode, the bar acts to provide the SUV with on-road stability in cornering and at high speeds.

KIA: SHAKY BRAKES?

A Philadelphia-based law firm has filed a class-action suit against Kia Motors America, alleging that the automaker knew about brake defects in 1998-2000 Sephia models. A faulty brake design allows premature wear of the front brake rotors, necessitating premature and frequent replacement of the front pads and rotors. The firm says that more than 300 consumer complaints have been logged with the National Highway Traffic Safety Administration (NHTSA) in the past three years, and that consumers have complained about the problem for the past five years. In an official statement, Kia officials said that all NHTSA-reported complaints have been "...focused on consumer-satisfaction issues...and not safety issues." The automaker also says that it has improved the brakes since the complaints were first reported.

VW RECALLS PASSATS

Volkswagen has recalled about 300,000 Passats worldwide due to a potential problem in the steering system. The protective sleeves over the tie-rod ends can fall off, exposing the part to road salt and debris. The problem only affects 1999 model-year cars.

FORD PROFIT-SHARING CHECKS AVERAGE $6700

Ford Motor Company has given its hourly workers profit-sharing checks for 2000. The checks, averaging $6700, constitute the company's second-largest payout ever, after 1999's average of $8000 per worker. About 110,000 U.S. hourly workers received the checks, which award workers based solely on the performance of Ford's U.S. automotive operations.

VOLVO PARTS WITH MITSUBISHI SHARES

Truckmaker Volvo AB has officially announced that it will sell its stake in Mitsubishi Motors to DaimlerChrysler, ending weeks of speculation. Volvo had intended to use the Mitsubishi partnership as a means of expanding into the Asian market, although recent plans between DaimlerChrysler and Mitsubishi seemed to conflict with a proposed Volvo-Mitsubishi joint venture for commercial trucks. Analysts suggested that a Volvo partnership with Japan's Nissan Diesel would make more sense, as Nissan's partner Renault already holds a stake in Volvo.

STRIKE LAWSUIT ADVANCES TO COURT

A lawsuit filed by 140 auto workers against their union, the United Auto Workers, and their employer, General Motors, has been approved by a federal judge, according to the Detroit News. The suit alleges that the union and the automaker intentionally prolonged the strike, and also that several unqualified people connected with UAW officials' got jobs with the automaker as a bargaining condition. The workers seek class-action status, which would reimburse workers for pay lost during the strike.

GM REACHES AGREEMENT WITH BRITISH WORKERS

British labor unions and General Motors have reached an agreement in a longstanding dispute over the planned closing of the automaker's Luton, England, assembly plant. GM now plans to avoid any forced layoffs through the transferring of about 500 workers to a neighboring plant that makes the Vauxhall Frontera SUV. Other workers will be relocated to the Ellesmere Port plant, which will assume production of the Vauxhall Vectra, currently made at the Luton plant.

DAEWOO SETS DEADLINE FOR GM

The South Korean government has set an April deadline for General Motors to explicitly express its interest in Daewoo. The government and creditors want specifics, else they want to go ahead with more changes that would set the company toward recovery. Daewoo went bankrupt in November, and since then has been under the control of a court receivership and additional money from the government and creditors.

 

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