By Daniel Howes and Mark Truby / The Detroit News
AUBURN HILLS -- DaimlerChrysler AG's troubled Chrysler Group said today that it will eliminate 26,000 jobs -- 20 percent of its workforce -- and shutter six plants over the next two years.
The targeted plants include Detroit's Mound Road engine plant, whose production will be transferred to the Mack Avenue plants in Detroit next year and then closed. One shift -- about 1,000 jobs -- will be eliminated at Detroit's Jefferson North plant, home to the Jeep Grand Cherokee.
The Auburn Hills-based Chrysler also said it will eliminate one shift at Windsor's Pillette Road large-van plant, halt a $1 billion renovation there and reduce assembly speed at the nearby Windsor minivan plant. Chrysler executives pushed for eliminating a third shift at the Windsor minivan plant, but Canadian Auto Workers bargainers signalled their intent to forcefully oppose such a move.
Chrysler will close engine and transmission plants in Toluca, Mexico, as well as its Cordoba assembly plant in Argentina. The Campo Largo assembly plant in Brazil will be idled and evaluated for closure, and production in the Lago Alberto plant in Mexico City will be shifted to Chrysler's Saltillo, Mexico, assembly plant.
Shifts also will be eliminated at the Bramalea car plant in Brampton, Ontario, the Belvidere, Ill., Neon plant, the aging Toledo II Jeep assembly plant and the Newark, Del., sport- utility vehicle plant. Generally speaking, officials said, one shift equals 1,000 jobs.
"Today this is our turning point," President Dieter Zetsche said today. "Today's actions will help remove the uncertainty many of our employees have been feeling. Going through this reduction of our workforce is the most serious part of our restructuring effort. But we can look up from this point."
The steps are part of Zetsche's broad restructuring of the troubled automaker, which posted a $512 million third-quarter loss last year and is expected to lose another $1.2 billion in the fourth quarter. Already, Chrysler has demanded 15-percent price reductions from suppliers over three years.
The cuts to Chrysler's 128,000-person workforce would eliminate 1,800 contract employees, 19,000 of the automaker's 94,000 hourly jobs and 5,000 of its 34,000 salaried jobs. The job reductions would come through attrition, early retirements and, if necessary, forced layoffs. Officials estimate that half of the cuts likely would come voluntarily.
Chrysler officials say 28,260 employees in the United States and Canada are eligible to retire and estimate that half of the job cuts could come from voluntary programs. UAW members at affected operations in Michigan, for example, would receive supplemental unemployment benefits for 42 weeks -- essentially 95 percent of their take-home pay -- followed by weekly straight-time pay and benefits until their contract expires in September 2003.
The plant actions come despite so-called "plant-closing moratoriums" in Chrysler's four-year contract with the United Auto Workers and its three-year deal with the CAW. By idling a plant, Chrysler can close the operation and then pay the union workforce for the remaining months on the existing contract.
Union leaders officially opposed any moves by Chrysler to shutter plants, which effectively would appear to violate the hard-won plant-closing moratorium. But union leaders also appear to have understood the depth of Chrysler's troubles and were preparing themselves for deep cutbacks to restore the automaker to profitability.
The plant-closing moratorium in the UAW-DaimlerChrysler national contract obliges the automaker to discuss any desired exemption from the moratorium. Among the conditions that "it is understood ... may arise," according to page 178 of the contract, is a "significant economic decline."
"Everything you're hearing about today was in the framework of our existing contracts with our unions," said Gary Henson, Chrysler's top manufacturing executive.
Company executives worked throughout the weekend to craft the final details of the manufacturing restructuring, which will be a cornerstone of Zetsche's unfolding turnaround plan. The complete restructuring also is likely to include a substantial charge against earnings and vehicle-development pacts with partner Mitsubishi Motors Corp.
Chrysler's parent, German automaker DaimlerChrysler, is expected to outline the broad restructuring on Feb. 26 in Stuttgart, three days after the plan is presented to the company's governing supervisory board.