DETROIT (AP) - Chrysler LLC will cut 825 jobs by eliminating one shift at a Toledo Jeep plant and accelerating the closure of its sport utility vehicle factory in Newark, Del., because of the slowing global economy and a shift toward smaller vehicles.
About 825 workers at the Toledo North Assembly Plant will be laid off indefinitely as of Dec. 31. The Newark closure also will be effective at the end of the year and affect about 1,000 jobs, the company said Thursday in a news release.
"It's a somber day for Lucas County. It's a somber day for manufacturing, but also a day of opportunity for those workers because they have good packages negotiated by the UAW," said Lucas County commissioner Pete Gerken.
The cuts are about 6 percent of Chrysler's U.S. hourly work force of 33,000.
The estimated downsizing at Jeep could translate into a loss of $1.6 million annually to the city tax revenue, Toledo Councilman George Sarantou told FOX Toledo News late Wednesday afternoon after rumors started to circulate.
"The effect, $1.6 million, is about 60 percent of the cost of a new police class, it could pay for 58 police cars, or it could pay for seven refuse trucks," Sarantou said.
The Toledo factory makes the Dodge Nitro and Jeep Liberty. Both have been selling slowly this year due to high gas prices and a slowing U.S. economy.
The Newark plant makes the slow-selling Dodge Durango and Chrysler Aspen sport utility vehicles. It originally was expected to close at the end of 2009.
Ninety percent of those laid off will receive 90 percent of their pay through 2011 in a deal UAW struck with Chrysler. Other employees will be offered buyouts from Chrysler. Money will still be coming in to employees and their families so those laid off can have the time to learn a new trade.
"People that manufacture are smart, work hard and know how to put things together," Commissioner Gerken said. "Let's take that and package that into green industry jobs."
U.S. Congresswoman Marcy Kaptur, who represents Ohio's Ninth District, received a call in early October warning her layoffs at Jeep were looming.
"I put the second shift layoffs at the doorstep of George Bush and his advisors like secretary Paulson who haven't used their powers properly," Kaptur said.
Toledo Mayor Carty Finkbeiner also expressed his disappointment at Chrysler's move.
"The layoffs at Jeep reflect the disastrous economic policies of the Bush Administration of the past eight years," Finkbeiner said. "Today, no one is buying cars because of their fear of the present and the future. This, in addition to impacting the lives of 825 Jeep family members hurts the small businesses and Jeep suppliers that are tied to the automobile economy as well."
Auburn Hills, Mich.-based Chrysler said in a statement that the changes will adjust inventory to better match consumer demand. Through the first nine months of the year, the company's U.S. sales have fallen 25 percent from the same period last year, the largest decline of any major automaker.
"The markets are facing unprecedented turmoil and we are in a time of historic change in the auto industry," said, Frank Ewasyshyn, Chrysler's executive vice president of manufacturing. "These tough, but necessary steps are vital to our long-term viability."
The privately held company said it would work with the United Auto Workers union to handle the layoffs in a "socially responsible manner."
The company in the past has offered buyout and early retirement programs to workers affected by plant slowdowns and closures.
Chrysler spokesman Ed Saenz said the Toledo North plant now is operating on two shifts. It has a total of 2,100 employees, 1,800 of whom are blue-collar.
UAW Local 12 President Bruce Baumhower has not commented on the Chrysler move. He is expected to once he discusses it with members affected by the cut.
"The nation as a whole will have to dig itself out of a bigger hole than we had 50 years ago," Mayo Finkbeiner said. "But we have the capability and creativity in this industry to dig ourselves out of this hole."
Neither of its vehicles is selling well. Through September, Chrysler has sold 30,071 Nitros this year — 46 percent fewer than a year ago. Liberty sales of 54,293 are off 21 percent, according to Autodata Corp.
The second shift at the Toledo assembly plant will be eliminated, said Jeep UAW leader Dan Henneman. "We pretty much knew it was coming," he said. "The orders since June have drastically gone down."
Just two years ago, about 750 jobs were added at the plant as production began on the Nitro. But the sport utility vehicle never took off, and Chrysler eliminated the third shift at the Toledo North assembly plant last November.
"We started this year with 4,000 employees and we're going to end it with 1,700," Henneman said. "But I don't think the blame is on management or how they run their business. It's not a Jeep issue. It's not a Chrysler issue. It's the whole industry."
The Newark plant has been running
on one shift since July 2006, and the company announced its intent to shut the factory down in February 2007. The 1,000 workers at the Newark plant had just returned to work Monday following a three-week layoff to scale back production.
Thursday was the deadline for Chrysler to give notice to workers if it planned to close the plant this year, said Richard McDonaugh Jr., who retired from the plant last year and stepped down as president of UAW Local 1183 earlier this year.
"We assumed that something was going to happen sooner than December 2009, but nobody was sure," McDonaugh said. "We knew the possibility was there."
Chrysler sold 17,339 Durangos through September, down 54 percent from sales for the first nine months of last year. Aspen sales dropped 21 percent to 17,681.
The company said Newark is the only place making Durangos and Aspens, both large truck-based SUVs that have fallen out of favor with customers due to high gasoline prices. But spokesmen would not say if the SUVs would be built elsewhere or the products would be eliminated.
"We don't talk about future product plans before they are announced," Saenz said.
Stuart Schorr, another Chrysler spokesman, said the company announced a $1.8 billion investment in its Jefferson North Assembly Plant in Detroit that will give it the flexibility to build a family of SUVs starting in 2010. The plant now builds the Jeep Grand Cherokee and Commander SUVs.
The company, Schorr said, is happy with sales of hybrid gas-electric Aspens and Durangos, and it would be premature to speculate on the vehicles' demise.
Chrysler has said a new version of the Grand Cherokee will be based on car-like underpinnings and be more fuel-efficient than the current body-on-frame truck-based vehicle.
General Motors Corp. has decided to close a plant in Moraine, Ohio, that makes the GMC Envoy, Chevrolet Trailblazer and Saab 9-7X midsize SUVs, and the company will no longer make those truck-based vehicles.
At GM, senior managers sent a memo to executives Wednesday saying early retirement and buyout offers to white-collar workers had been well-received but that the company still would have to make involuntary layoffs.
More job cuts are likely if the U.S. auto sales volume continues to decline into 2009, said Laurie Harbour-Felax, president of the Harbour-Felax Group, a Detroit-area auto industry consulting company.
"If volume continues to fall through the tank as we go into 2009, then they're going to be left with a whole bunch more people," she said.
If recent talk about a potential acquisition of Chrysler by GM comes true, even more job losses are likely, she said.
"The whole thing becomes somewhat scary of a concept to think about, more job losses, especially in Michigan," she said.
GM, Ford Motor Co. and Chrysler together employ about 230,000 people. As of June, the U.S.-based automakers had announced the shutdown of 35 plants since 2005, according to Sean McAlinden, chief economist with the Center for Automotive Research in Ann Arbor. Along with 35 additional closures at GM and Ford's chief suppliers, about 149,000 hourly and salaried jobs have been eliminated in that time.
Chrysler said in a statement that the changes will adjust inventory to better match consumer demand. Through the first nine months of the year, the company's U.S. sales have fallen 25 percent from the same period last year, the largest decline of any major automaker. U.S. sales industrywide are down 13 percent from a year earlier.
"The markets are facing unprecedented turmoil and we are in a time of historic change in the auto industry," said Frank Ewasyshyn, Chrysler's executive vice president of manufacturing. "These tough but necessary steps are vital to our long-term viability."
"It was just sad to look around and see the faces of so many people and how it's going to affect them," said Donna Branch-Jones, 43, a 15-year veteran who works on the door assembly line. "We've been expecting it, but it's just kind of a slap in the face to hear it today. The reality is finally here."
Chrysler ran into difficulty earlier this year with its truck-heavy lineup as gas prices approached $4 per gallon and consumers switched to smaller cars. The company's car offerings have not sold well, even when other manufacturers have seen sales increases.
Meanwhile, Cerberus has said it's in talks with Daimler to buy the German company's stake in the struggling U.S. automaker. On a conference call Thursday, Daimler Chief Financial Officer Bodo Uebber said those negotiations continue.
At GM, the company decided it will temporarily stop matching salaried employees' 401(k) contributions as of Nov. 1, and it suspend tuition reimbursement and adoption assistance programs at the end of this year.
Spokesman Tom Wilkinson would not say how many white-collar workers had accepted offers to leave, nor would he say if the company has a goal for reducing their ranks.
Detroit-based GM has been working to slash its costs this year
as it tries to save money to outlast a prolonged economic downturn. In August, the automaker began offering buyouts to some salaried workers to cut 15 percent of white-collar costs.
GM had 44,000 U.S. salaried workers in 2000. That dropped to 32,000 by the end of last year.
Earlier in the year, GM laid out a vast, $15 billion restructuring plan involving cost cuts, asset sales and borrowing. As part of the plan, the automaker said it would cut thousands of salaried and hourly jobs, sell assets, suspend its dividend and eliminate health care for salaried retirees over age 65.
GM has reported losing $57.5 billion in the last 20 months, including a $15.5 billion loss in the second quarter. Its vehicle sales declined 18 percent in the first nine months of this year, and it is burning through $1 billion in cash per month.
In Newark, Delaware AFL-CIO president Samuel Lathem, who worked at the Chrysler plant for about 25 years, said U.S. automakers got too complacent over the years and finally are getting the message that Americans want smaller, more efficient cars.
"In that respect, we're way behind," he said, adding that American manufacturing workers are a dying breed. "We're becoming a servicing country."
Lathem paid a visit Thursday afternoon to the local UAW hall, where flags were flying at half mast in honor of a former state legislator who died recently.
"It might as well be for us," joked Lathem, a retired UAW leader.
(Associated Press writer John Seewer in Toledo, Ohio, and AP Business Writers Matt Moore in Frankfurt, Germany and Randall Chase in Newark, Del., and Dan Strumpf in New York, and FOX Toledo's Shaun Hegarty, Michelle Zepeda and Kristi Leigh contributed to this report)
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