Chrysler Cuts Won’t Match Ford

January 7, 2007

Struggling to reverse mounting losses and trim as much as $1000 in cost off every one of its vehicles, Chrysler Group plans to announce a significant restructuring sometime in February, confirmed the automaker’s embattled CEO, Tom LaSorda, during an interview at the Detroit Auto Show. But LaSorda stressed that the cutbacks won’t match those recently announced by Ford, which will cut itsU.S. workforce by roughly a third.

“All areas are open” for restructuring LaSorda confirmed, but he noted that Chrysler has already made significant job cuts since its last turnaround plan was announced, in 2001. Since that time, the company’s employment rolls have been trimmed from 126,000 to less than 83,000.


During the preview of Chrysler’s redesigned minivans, LaSorda had joked about the heat he was taking with the company losing so much money. Numerous news reports have suggested the CEO has only until mid-2007 to turn things around, and during the interview, LaSorda admitted “The buck stops here.” But he insisted he continues “to look forward (with) my head held high.”


One way to trim costs is by revising the company health care program, LaSorda said. So far, though, the United Auto Workers has refused to grant Chrysler the same medical coverage concessions granted both General Motors and Ford Motor Co., which LaSorda lamented has created a serious “competitive disadvantage.” But with Chrysler’s crisis worsening, the UAW has reopened talks, the executive noted, adding that he hopes to see an agreement before summer.


Cutting costs is not the only thing Chrysler needs in order to achieve a turnaround, said the CEO. “We also feel strongly that we need to grow internationally” at a faster rate. While volume outside the U.S. now totals more than 100,000 vehicles annually, LaSorda said his goal is double that number, then “double it again,” though he declined to lay out a timetable for that growth.


Much of that growth is coming in China, itself the fastest-expanding market in the world. Chrysler recently announced plans to produce a new generation of minicars in a partnership with Chery, one of the more successful, independent Chinese automakers. Those vehicles would be exported to the U.S. and Europe, according to LaSorda. But he cautioned that the proposed deal still needs to be approved by the supervisory board of DaimlerChrysler AG, as well as the Chinese government. If that happens, company sources told, the first of those minicars could reach the U.S. by sometime in 2009.


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