The restructuring plan will reduce shifts at three domestic production plants, close a Newark, Del., sport-utility manufacturing plant, and eliminate 13,000 jobs over the next three years.
“We believe that this represents a solid plan to return to profitability and lay the groundwork for a solid future,” Chrysler CEO Tom LaSorda said at a news conference from Chrysler’s headquarters in Auburn Hills, Mich.
About 11,000 of the employees scheduled to be laid off are hourly workers, including 9,000 American production workers. The other 2,000 jobs that will be cut are salaried positions.
“Today’s action by DaimlerChrysler is devastating news for thousands of workers, their families and their communities,” United Auto Workers union President Ron Gettelfinger and Vice President General Holiefield said in a joint statement.
Chrysler is the latest Detroit automaker to reduce jobs and vehicle production. Last year, Ford and General Motors negotiated with the United Auto Workers union to offer early retirement and buyout packages for its employees.
After a profitable 2005 in which Chrysler Group earned over $2 billion, it seemed as if the company had managed to avoid the economic losses experienced by Ford and GM in recent years.
But in 2006, due to heavy reliance on fuel-inefficient light trucks coupled with a spike in gas prices, the company lost $1.5 billion, including $162.8 million in the fourth quarter of last year.
“It was a strong year at three of [DaimlerChrysler’s] divisions, but it’s been a difficult and disappointing one here at the Chrysler group,” Dieter Zetsche, CEO of DaimlerChrysler, said at the Chrysler news conference.
Zetsche said that that the company was pursuing “further strategic options with partners” along with the restructuring plan to help the struggling division recover, reported the Associated Press.