Marketwatch.com is reporting that Chrysler will drop four car models from its roster and lay off crews at five of its US plants. Chrysler Chairman Bob Nardelli said that the company is expecting “significantly lower” sales through the end of 2007 and into 2008.
The Chrysler Corporation recently signed an agreement with the United Auto Workers union to settle grievances over cost-of-living pay increases and extending benefits for Chrysler workers. Evidently, however, the union agreement was not enough to save the company from cutting more than 10,000 manufacturing jobs now on the line.
Over the course of the next six to 12 months, Chrysler plans to discontinue production of five models, including the PT Cruiser Convertible, the Dodge Magnum, and the crossfire. Automotive industry analysts consider Chrysler’s job cuts to be prudent in light of recent market changes.
Five Chrysler auto manufacturing and assembling plants in North America will be affected by the job cuts. The cuts will pertain to approximately 1000 salaried Chrysler employees, and more than a third of its current contract workers. Chrysler is declining to name the specific manufacturing plants affected at this time, though analysts speculate that all five are located within the continental United States.
But even though Chrysler’s position within the North American market looks weak, the company is actually expanding its so-called “muscle car” lineup with the Dodge Journey. With most US automakers rushing to release new hybrid or at least “green” vehicles, which maximize fuel efficiency and reduce carbon emissions, it appears that Chrysler is actually going the other way by adding to its roster of “gas guzzlers.”
Chrysler’s stock prices fell in October a record 9%, causing market analysts to wonder if the automaker’s woes are part of a bigger national economic downturn, fueled by the low dollar. With real estate struggling, and large manufacturers such as Chrysler laying off jobs, there is speculation on Wall Street that the US’s recent economic troubles may last longer than anticipated.
But at least for Chrysler, the immediate question is will the job layoffs be enough to boost the automakers sagging stock price on Wall Street? Some automotive industry experts see the layoffs as a healthy move to “right size” Chrysler’s workforce to an appropriate level for the current market.
Either way, those affected most by Chrysler’s poor sales in 2007 will be its workers. And although the US unemployment rate is relatively low at this time, closings and layoffs such as those by Chrysler later this year are certain to increase the unemployment rate into early 2008.
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