Chrysler LLC said Friday it was slashing up to a quarter of its white-collar workforce by the end of this year to cope with economic and market turmoil hitting the auto industry.
Up to 5,000 jobs will be eliminated throughout the company's facilities worldwide, said David Elshoff, spokesman for the struggling number three US automaker.
The plan is to achieve the workforce reduction through voluntary employee departures in November, but “if we don't make our numbers and need to expand it to involuntary actions, those will take place by the end of December,” he said.
The announcement came a day after Chrysler said it was cutting production and jobs in the United States “in response to the continuing global economic slowdown and auto industry contraction, as well as the market's continuing movement toward smaller vehicles.
Chrysler said it was eliminating one shift of production at an Ohio plant and will advance the closure of an assembly plant in Delaware by nearly a year, eliminating 1,825 jobs. Both measures take effect on December 31.
The shift elimination affects 825 jobs and the Delaware plant closure will result in the loss of some 1,000 jobs, the privately held company said.
“The markets are facing unprecedented turmoil and we are in a time of historic change in the auto industry,” Frank Ewasyshyn, executive vice president of manufacturing at Chrysler, said in announcing the production cutbacks Thursday.
“These tough, but necessary steps are vital to our long-term viability,” he said.
Chrysler, third of Detroit's Big Three automakers, after General Motors and Ford, in July announced it would eliminate 1,000 white-collar jobs, which already has resulted in 250 layoffs in September.
The company, which was acquired by private equity firm Cerberus in August 2007, is scrambling in a US auto market in freefall, where its larger, gasoline-guzzling models — the most profitable for the bottom line — no longer are in demand amid high oil prices: sales plunged 33 percent in September.
The object of growing speculation that it will be swallowed up by a rival automaker, Chrysler had some 66,000 employees at the end of September. The company lost 1.9 billion dollars in 2007, and nearly 400 million dollars this year, according to media reports.
The global financial crisis, a severe real estate slump and rising unemployment have battered Chrysler along with the rest of the US auto sector.
General Motors announced Thursday that its employee buyout program was not enough to cut costs and said it would eliminate an unspecified number of white-collar jobs in the coming months. GM has slashed 34,000 jobs since 2005, and now has a workforce of 106,000.
Ford shed 15 percent of its employees this year in a voluntary departure program.
Chrysler chief executive Robert Nardelli, in a letter to employees Friday, said the job cuts were necessary because the US economic slump and tightening credit were crushing auto sales, The Wall Street Journal reported.
Nardelli said the company was facing the “most difficult economic period any of us can remember.”
Earlier this month, Nardelli confirmed the company had opened talks with several companies in search of a tie-up. GM, which has piled up 66 billion dollars in net losses since 2005, seemed to be the main candidate.
German carmaker Daimler said Thursday that its remaining 20 percent stake in Chrysler was now worthless on its books and that it was still in talks to sell the share to the US giant's majority owner, Cerberus.
Daimler's finance chief Bodo Uebber said that talks with Cerberus to sell the stake, announced last month, were ongoing.
