Auburn Hills, Michigan, U.S.: German-US auto giant DaimlerChrysler said on Wednesday it would axe 13,000 jobs at US unit Chrysler as part of a restructuring aimed at restoring its profitability by 2008.
Chairman Dieter Zetsche also said the automaker was examining “other options” and did not rule out the sale of Chrysler, a move sought by shareholders in Germany.
The job cuts represent 16 percent of the subsidiary’s current global workforce of 82,500 and come just six years after another Chrysler turnaround plan eliminated 26,000 jobs and 16 plants.
“It’s a three-year plan geared to quickly return us to profitability in 2008 but also change how we do business in the long run in order to sustain that profitability,” Tom LaSorda, Chrysler Group president, said at a news conference.
The announced job cuts at the Auburn Hills-based automaker follow major downsizing plans at General Motors and Ford, also struggling against a loss of US market share to Japanese competitors, and bring total automotive job cuts in the United States since 1999 to nearly 790,000, according to consulting firm Challenger, Gray and Christmas.
Upon completion of the downsizing, the Chrysler Group will have nearly half the number of employees it had at its peak, after it was purchased by Daimler Benz in 1998.
The bulk of the job losses will affect union workers, with 9,000 hourly jobs eliminated in the United States and 2,000 in Canada.
The United Auto Workers union called the plan “devastating” and said it would fight to win back jobs as the automaker returns to profitability.
The automaker said it would take a restructuring charge of one billion euros (1.3 billion dollars) in 2007 with a net cash impact for the year of about 800 million euros (one billion dollars).
The announcement came as DaimlerChrysler reported net profit of 3.2 billion euros (4.2 billion dollars) in 2006, up 14 percent from the figure a year earlier, thanks largely to the strong performance of its up-market Mercedes-Benz brand and the trucks business.
Operating profit grew by 6.4 percent to 5.52 billion euros.
However, the development in earnings “was primarily impacted by the significant decline in earnings at the Chrysler Group,” the automaker said.
Chrysler booked operating loss of 1.118 billion euros in 2006, compared with an operating profit of 1.534 billion euros in 2005.
In terms of sales, DaimlerChrysler said it sold a total of 4.7 million vehicles worldwide in 2006, compared with 4.8 million in 2005. Revenues, on the other hand, edged up by one percent to 151.6 billion euros.