Chrysler slashes 12,000 -- is it enough to make Chrysler competitive?

Posted Nov 1st 2007 11:46AM by Peter Cohan


The Associated Press reports that Chrysler has slashed the jobs of 12,000 workers -- a Halloween trick for its people if there ever was one. But is this 15% of its workforce layoff going to make Chrysler competitive?

Chrysler's cutting slow selling products and investing in new ones. Specifically, Chrysler is eliminating the Dodge Magnum wagon, the convertible version of the Chrysler PT Cruiser, the Chrysler Pacifica crossover and the Chrysler Crossfire sportscar. And it's introducing the Dodge Journey crossover and Dodge Challenger, along with two new hybrid models, the Chrysler Aspen and Dodge Durango.
In order to compete in these market segments, Chrysler will need to lower its costs enough to make a profit selling at competitive prices. But no company has ever slashed its way to success. In addition, Chrysler needs new products that its customers want to buy -- that takes design, manufacturing, and marketing skills. At this point it's too early to tell whether Chrysler has cut enough or whether those new products will boost its revenues and profits.

One thing's for sure -- if Chrysler's new strategy works, its CEO Bob Nardelli will get a handsome payday and will take some of the tarnish off the bad reputation he earned at Home Depot Inc. (NYSE: HD).