If feel for this autoworker who do not know if they have a job from one year to the next.

Suppliers, dealers weigh Chrysler cuts


Posted by Sven Gustafson | Oakland Business Review November 08, 2007 01:53AM

Suppliers, staffing companies and dealers are bracing for the worst but were still awaiting details after Chrysler LLC announced it would slash up to 12,000 jobs and end production of four models in 2008.

Chrysler cited slowing volume in announcing it would eliminate shifts at five North American plants, including three in the Detroit area that employ more than 2,000 workers collectively. Also planned is the elimination of 1,000 salaried and 1,100 contract workers.


The restructuring is the first undertaken by new owner Cerberus Capital Management LP. It also came atop the company's announcement in February that it would eliminate 13,000 hourly and salaried positions as part of its restructuring plan.

CHRYSLER'S PLANNED CUTS
Jobs to be reduced: 8,500-10,000 hourly, 1,000 salaried and 1,100 contract positions through 2008.

Shifts eliminated: Third shifts at Toledo, Ohio; Belvidere, Ill.; and Brampton, Ontario; second shifts at Jefferson North (Detroit) and Sterling Heights Assembly. Also eliminating one of three crews working during two shifts at Mack Avenue (Detroit) Engine Plant II.

Products out: Dodge Magnum, Chrysler PT Cruiser convertible, Chrysler Pacifica, Chrysler Crossfire.

Products in: Dodge Journey, Dodge Challenger, hybrid versions of Chrysler Aspen and Dodge Durango.

The latest restructuring includes the phase-out of four models next year: the Dodge Magnum wagon, the convertible version of the Chrysler PT Cruiser, the Chrysler Pacifica crossover and the Chrysler Crossfire roadster.

"Whenever an automaker reduces its production schedule to this degree, kind of like when they catch a cold, catch a sneeze, the supply base catches pneumonia," said Greg Gardner, an analyst with Troy-based Harbour Consulting.

The cuts come just days after the automaker won narrow ratification of a labor contract with the United Auto Workers. Many union members opposed that contract because Chrysler was unwilling to make the kinds of product commitments for U.S. factories that General Motors Corp. did in their labor contract. "This announcement pretty much explains why," Gardner said.

Analysts said the move underscored the ability of private-equity owner Cerberus to move quickly to restore profitability. Key suppliers to Chrysler said it was not yet clear how they would be affected by the moves.

Magna International Inc., which has its North American headquarters in Troy, employs about 200 at a factory in Windsor that provides complete seat assemblies for the Pacifica. "Because we don't know the timing of when that's going to be discontinued, it's just too early to say what the impact will be for us," said Tracy Fuerst, spokeswoman for Magna International Inc.

Magna also supplies small components for the Magnum, she said.

Warren-based MSX International Inc. provides Chrysler with contract engineers but had not yet been notified about whether it would be affected by the cuts, spokeswoman Gwen Carlson said.

BorgWarner Inc. and Lear Corp. both said they would feel little adverse impact from the cuts. Chrysler is among Lear's top three or four customers, but the supplier provides only minimal trim and electronics content to the affected vehicles, spokeswoman Andrea Puchalsky said.

"Even if you are heavily focused on Chrysler, the down side might not be as bad as many people are thinking," said Erich Merkle, vice president of forecasting for IRN Inc. in Grand Rapids. He said Chrysler's production runs over the last few years have been "incredibly volatile."

"That's not cheap for a supplier," he said. "So what this allows Chrysler to do is have more consistent production runs so they're not

 

It's getting to be this way these days. In all truth, Chrysler did have one too many cars in the same segment and needed to cut out a few, the only thing is they need to have a full car line-up again, meaning they need a replacement for the Neon.