WORLD> America
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WORLD> America
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Chrysler slashing 5,000 jobs as sale talk goes on
(Agencies)
Updated: 2008-10-25 15:07 A GM acquisition may involve going to Congress for cash, according to another person involved in the financing discussions. The person also asked not to be identified because the talks are confidential.
The government may get involved to preserve jobs in the industry and protect Chrysler's pension plan, which has about 125,000 people receiving benefits. Chrysler employs about 49,000 people in the US. Chrysler's sales are down 25 percent through the first nine months of the year, the worst decline of any major automaker. Although Chrysler is a private company and doesn't report earnings, it had a $772.5 million operating loss in the second quarter, according to the balance sheet of Daimler AG, which still owns 19.9 percent of the US automaker. Chrysler issued a statement pegging the loss at $660 million. Its loss for the first half of this year totals about $1.28 billion, after losing $1.6 billion last year. Nardelli's memo said the company will reduce capital expenditures and cut discretionary spending while protecting "all major product programs." But Bragman said the size of the cuts likely means new product expenditures will be cut. The company already has signed an agreement with Nissan to build a subcompact car for Chrysler and may be discussing a new midsize product with Nissan, Bragman said. Chrysler also has a deal with Chinese automaker Chery Automobile Co. to build small cars. "You can eliminate a large group of people if you're simply going to be buying it from someone else," Bragman said. David Cole, chairman of the Center for Automotive Research in Ann Arbor, said Chrysler has to take advantage of poor sales, tight credit and the weak economy to make more cuts in factory capacity and other areas, whether it is sold or not. "They've got to be very active, decisive," Cole said. "Anything they can do prior to coming together would be less that would be required afterward." In a statement, Nardelli said the auto industry is going through "truly unimaginable" times. "We continue to be in the most difficult economic period most of us can remember. The combination of troubled financial markets, difficult credit, volatile commodity prices, the housing crisis and declining consumer confidence continues to weigh on the economy. Never before have auto industry sales contracted at such a fast rate," he said. The cuts come atop an announcement made Thursday that Chrysler announced it will shed 1,825 jobs by eliminating one shift at a Toledo, Ohio, Jeep plant and accelerating the closure of its sport utility vehicle factory in Newark, Del. |
