A financially strapped DaimlerChrysler AG is making some long-term cuts in both its work force and production, closing plants in four countries and slowing production at another seven sites.
Because the automaker relies on outside suppliers for 70 percent of the content of its vehicles, the changes will affect other businesses — but the extent of that hit will vary widely.
DaimlerChrysler announced cuts Jan. 29 at its North American Chrysler unit, aiming to slow a fiscal slide that saw it lose more than $500 million in the third quarter of 2000 and even more in the fourth quarter.
Corporate leaders with DaimlerChrysler in Stuttgart, Germany, already informed suppliers they will reduce costs 15 percent over a little more than two years.
While Chrysler executives will not disclose the full restructuring plan until the end of February, they provided some details at a news conference in Auburn Hills, Mich., the North American headquarters.
The program will:
Cut 26,000 salaried and hourly jobs, or 20 percent of the work force. The company is offering a retirement package it hopes will entice workers to leave voluntarily but expects to lay off others.
Close six facilities by the end of 2002 — an engine plant in Warren, Mich.; a transmission plant and an engine plant in Toluca, Mexico; and assembly plants in Lago Alberto, Mexico; Cordoba, Argentina; and Parana, Brazil.
Eliminate the third shift at assembly plants in Detroit; Belvidere, Ill.; Toledo, Ohio; Brampton, Ontario; and Windsor, Ontario.
Slow the line speed at two assembly operations, at a second facility in Windsor and in Newark, Del.
Suppliers still are trying to decipher the plan's fine print to determine exactly how the cuts will hit them, said Neil De Koker, managing director of the Troy, Mich.-based Original Equipment Suppliers Association.
"Yes, we're affected, but you can't really say how much across the board," he said. "It's all very, very relative."
For example, an interior trim supplier to the PT Cruiser could end up working around-the-clock to meet demand for the popular model, De Koker said.
On the other hand, the outlook probably isn't good for a supplier to the Jeep program, which is being cut.
"[Suppliers] have got to be able to roll with the punches for another couple of months," said Katie Noonan, president of Noonan Group, a Troy, Mich.-based consulting firm.