Chrysler to cut jobs, 4 vehicles

Chrysler is eliminating 15 percent of its work force.

DETROIT (AP) — The ink barely dry on a new four-year labor contract, Chrysler LLC says it plans to cut up to 12,000 jobs and remove four models from its lineup. The move stunned workers and suggests the now-private Chrysler won’t hesitate to cut production and jettison vehicles that aren’t selling well.

Chrysler said Thursday it will cut 8,500 to 10,000 hourly jobs and 2,100 salaried jobs through 2008, or about 15 percent of its work force. The cuts come on top of 13,000 Chrysler layoffs that were announced in February.

Chrysler also will eliminate shifts at five North American assembly plants and cut four models, including the slow-selling PT Cruiser convertible and Dodge Magnum wagon.

Chrysler officials said falling demand for vehicles in the U.S. market made the cuts necessary. Chrysler’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.

“We have to move now to adjust the way our company looks and acts to reflect a smaller market,” Chrysler Vice Chairman and President Tom LaSorda, who led the company through the recent contract talks, said in a statement. “That means a cost base that is right-sized and an appropriate level of plant utilization.”

Most workers will be offered buyout or early-retirement packages. The details of those packages weren’t released Thursday. Workers also could be offered jobs at other plants. About 1,100 of the salaried workers affected are temporary workers, who don’t get severance packages.

As part of the new plan, shifts will be cut at vehicle assembly plants in Belvidere, Ill.; Toledo, Ohio; Brampton, Ontario; and Jefferson North and Sterling Heights in the Detroit area. Also, jobs will be cut at the company’s Mack Avenue engine plant.

The company also said it will eliminate four products through 2008: the Dodge Magnum wagon, the convertible version of the Chrysler PT Cruiser, the Chrysler Pacifica crossover and the Chrysler Crossfire sports car.

In the same time frame, Chrysler plans to add two new products: the Dodge Journey crossover and Dodge Challenger sports car, along with two new hybrid models, the Chrysler Aspen and Dodge Durango.

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.

Chrysler, which became a private company in August, is now better equipped to make those changes, since it doesn’t report earnings and can afford to take a short-term hit paying for buyouts. The private equity firm Cerberus Capital Management became the majority owner of Chrysler after buying an 80.1 percent stake from Chrysler’s former partner, German automaker Daimler AG.