Jeep cuts tied to poor sales; 750 Toledo jobs among Chrysler's plan to slash 11,000


Chrysler will end the third shift at the Toledo Jeep Assembly Complex that makes the Nitro, above, and Liberty. Sales of both vehicles have faltered this year. ‘This is a market-driven layoff,’ a union leader said.



By MARK REITER
BLADE BUSINESS WRITER


The blow was swift, but taken in stride.

Hours after Chrysler LLC yesterday announced it was cutting 8,500 to 10,000 factory jobs and 1,000 salaried positions, the union leader overseeing the Toledo Jeep Assembly complex was disappointed.

Bruce Baumhower, president of United Auto Workers Local 12 at Toledo Jeep, said the company’s cancellation of the third shift and elimination of 750 jobs at the factory were in reaction to poor vehicle sales.

“This is a market-driven layoff,” he said.

The affected workers make the Jeep Liberty and Dodge Nitro. Sales of the former are off 34 percent this year and sales of the latter haven’t soared.

Not affected are the Chrysler and supplier workers at Toledo Jeep who make the hot-selling Jeep Wrangler at next-door factories.

The sweeping job cuts across the company include eliminating an afternoon shift at Chrysler plants in Belvidere, Ill., Brampton, Ont., Detroit, and Sterling Heights, Mich. The reductions will occur early next year.

The changes are in addition to a restructuring plan announced in February in which the company said it will cut 13,000 jobs over three years.

Bob Nardelli, chairman and chief executive officer of the company, said the new round of layoffs shows how the car market has changed in the last eight months.

The firm’s sales fell 3 percent in the first nine months of this year, according to Autodata Corp., and the company said it expects sluggish sales in 2008.

Four slow-selling vehicles — the Chrysler Pacifica, Chrysler Crossfire, PT Cruiser convertible, and the Dodge Magnum — will be discontinued next year.

Still, the automaker said it will begin production of hybrid versions of the Chrysler Aspen and Dodge Durango, and of the Dodge Challenger and Dodge Journey crossover.
The hybrids will be built alongside the nonhybrid models at Chrysler’s plant in Newark, Del.

The Challenger will be assembled in Brampton and the Journey in Mexico.

Private equity firm Cereberus Equity Management paid $7.4 billion to buy Chrysler in August.

Company spokesman Dave Elshoff said offers for early retirement and voluntary separation will be made to employees and changes could include the transfer of workers to other plants. The details of those packages weren’t released.

The nation’s fourth-ranking automaker by market share has about 45,000 UAW workers in the United States and 15,000 employees in Canada and Mexico.

The cutbacks were announced the day after the first meeting of Cereberus’ board and less than a week after UAW workers narrowly ratified a four-year national labor contract.

Industry analysts said the cuts were long overdue to avoid overproduction, which leads to high inventories, angry dealers, and costly incentives to move cars off dealers’ lots.

“One of the things that private equity does is give them the discipline and the financial patience to be able to do things like this,” said David Cole, chairman of the Center for Automotive Research in Ann Arbor. “It’s about time.”

The automaker said it would invest $15 billion in its U.S. plants through 2011, but no specifics were provided.

Mr. Baumhower, at Toledo’s Local 12, said the union will ask that retirement incentives be offered to veteran employees and a rotation layoff program be used to reduce the impact of the cuts.

He will pursue efforts to obtain new-vehicle production at the plant. Toledo Jeep has at least 3,500 Chrysler workers.

Several local union presidents and workers said