Chrysler, Off To Unfold The Biggest Gamble Ever
|Topics: Chrysler LLC
February 13, 2007
DaimlerChrysler AG's supervisory board arrived in Auburn Hills to finalize its major restructuring plan. The details of its restructuring plan that is tagged as its “biggest gamble” will be announced on Wednesday.
Analysts in the industry anticipate that some 10,000 blue-collar jobs and 1,000 salaried positions will be slashed by the company in accordance with its restructuring plan. The Chrysler Group is also expected to strengthen ties with its German parent - Mercedes-Benz. The dramatic overhauling is aimed at coping with the projected $1.2 billion loss of the company in 2006.
Despite the remarkable clamor of German investors regarding the sale of Chrysler, its board is firm in its stand not to sell it. Instead, the board entertained the controversial restructure plan dubbed as “Project X.” The strengthening of bond between Chrysler and Mercedes-Benz luxury division is expected to create compact and efficient cars that would rekindle the old flame of the automaker to enthusiasts.
“Project X” is penned by top Chrysler executives. The said plan is also the biggest gamble of Dieter Zetsche, DaimlerChrysler’s chief executive, since early 2006 when he took over the company. People familiar to the plan said the 20-member supervisory board will begin meeting today, but they would not vote until Wednesday morning on the wide-ranging restructuring plan. They said “Project X” covers significant plant closures and shift reductions at Chrysler’s factories in the United Stats and Canada. The plants predicted to close include an engine plant in Detroit and an assembly plant in Newark, Delaware.
Zetsche, as head of the Chrysler for five years now, triggered ambitious growth for the former number three automaker in the United States. It can be recalled that Chrysler was acquired by Daimler-Benz AG in 1998. However, when the brand stumbled last year reporting a total loss of $1.5 billion for the third quarter, German shareholders expressed their willingness to purchase the brand. But the company decided to move on through a recovery plan that aims to stabilize its sales and operations. "From now on, it is Zetsche's Chrysler," said Juergen Pieper, chief auto analyst at Metzler Bank in Frankfurt. "The whole thing is his baby."
Zetsche and Tom LaSorda, chief executives of the company, will present “Project X” to the supervisory board this Wednesday for its approval. Details of the plan are set to be unleashed by LaSorda after approval. They will be announced together with the company’s financial report for 2006.
The restructure plan is in essence, similar to that of General Motors and the Ford Motor Company. Basically, it will include a number of plant closures, job cuts and buyouts. Terry Ammons, a veteran of 33 years with Chrysler, said a buyout could be attractive for some longtime workers. Ammons added, "We have quite a few people at Mack with 35 years experience. If there was a package, they would probably take it."
In Newark, Del., UAW Local 1183 President Richard McDonaugh Jr. sent an e-mail to workers telling them not to believe all the rumors that have spread like wildfire. "Everyone's just waiting for Wednesday," said Al Grandell, 49, of Newark, a 31-year Chrysler veteran. "Everybody's bracing for the worst."
“Project X” will also cover the introduction of new cars that are designed to appeal to a wide consumer base. These vehicles are not only efficient, functional, stylish and fuel-efficient - they also incorporate innovations and new auto systems to take driving experience to a new level. Auto parts accessories like engines, suspension, radiators, EBC brake rotors, cooling system and safety features are to be improved to serve driving demands better.
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