The Chrysler Group, which had an operating loss of $1.475 billion in 2006 and expects to show losses through 2007, announced Wednesday that it would eliminate 13,000 positions, including 11,000 production jobs and 2,000 white-collar posts, as it seeks to cut costs and return to profitability in 2008.
Of the production job cuts, 9,000 are in the U.S. and 2,000 are in Canada.
Chrysler, part of Germany-based DaimlerChrysler AG, said Wednesday it plans to close the Newark, Del., assembly plant during the next two years and cut shifts at plants in Warren, Mich., and St. Louis. The company also announced that a parts distribution center which employs 100 workers near Cleveland also will close this year.
On Thursday, company officials said much of the impact would be in southeastern Michigan, where 5,300 people will lose their jobs by 2009.
Yesterday, the Fed released the January Industrial production numbers. They decreased by .5%, largely caused by a big drop in auto production. This plan will go into effect throughout 2007 and probably into 2008. This means another US automaker is scaling back production. Don't be surprised if this hits the industrial production numbers going forward.
I should also add the Ford (F), GM (GM) and Daimler Chrysler (DCX) stocks have all rallied over the last few months, probably in anticipation of these plans working. I have been wondering if these rallies were warranted given the underlying problems of these three companies.