Chrysler cuts: Tier-twos likely to take the big hit

3:01 am, November 5, 2007


Supplier fallout from Chrysler L.L.C.'s decision last week to cut four vehicles will likely range from minimal for large tier-one suppliers to catastrophic for some tier-two suppliers.

Chrysler said Thursday it plans to slash 9,500 to 11,000 hourly and salaried jobs before the end of next year and to cut 37 percent of its contract employees. That's on top of a previously announced restructuring plan that calls for eliminating 13,000 jobs.

Chrysler also said it will cut four vehicles from its lineup in 2008.

Those vehicles are the Dodge Magnum, the Chry-sler PT Cruiser convertible, the Chrysler Pacifica cross-over and the Chrysler Cross-fire convertible.

"It's not a huge surprise," said Kim Korth, president of Grand Rapids-based automotive consultancy IRN Inc. "I don't think there is a huge amount of gnashing of teeth over that."

Chrysler plans to add the Dodge Journey crossover and Dodge Challenger coupe, along with two hybrid models, the Chrysler Aspen and Dodge Durango sport-utility vehicles.
Jim Gillette, director of supplier analysis for CSM Worldwide Inc., said his firm has been warning clients for a while that the Pacifica could be canceled.

Still, Gillette said, some tier-two suppliers are likely to be hit hard.

"The ones that are going to be hurt the most are the undiversified tier-two suppliers that happen to have a contract that fits nicely in with the cuts that are going to be made," he said.

In addition, Chrysler will drop shifts at the Jefferson North assembly plant and the Mack Avenue Engine Plant II in Detroit, and the Sterling Heights assembly plant.