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Chrysler tells UAW more job cuts may be required

DaimlerChrysler AG's Chrysler unit, which has cut 30,000 jobs and closed seven factories since 2001, told union leaders that further reductions may be needed if it can't stem losses, people familiar with the company's contract talks said.

Chrysler, which lost US$1.1 billion in the second quarter, described a "worst case" business plan last week to United Auto Workers negotiators, said the people, who asked not to be named.

The plan by the third-largest US automaker may include significant job cuts, the people said, without offering details.

Unless Chrysler can increase US sales, "they may need to cut 12,000 jobs over the next four years," said Sean McAlinden, an analyst for the Center for Automotive Research based in Ann Arbor, Michigan, who studies labor issues.

The UAW has 63,397 members at the company, and its contract expires Sept. 14.

Chief executive officer Dieter Zetsche has said he wants to raise profit by introducing new models and improving existing products. His goal is to increase sales by a million cars and trucks a year by the end of the decade, or about 3.8 million units.

He has said the automaker can maintain its current workforce if his plan works.

"What Chrysler is telling the UAW is that they're still really in trouble," McAlinden said.

Chrysler lags Toyota Motor Corp in productivity and needs to catch up, senior vice president John Franciosi told reporters last month.

The company took an average of 28 hours to assemble its cars and trucks in North America last year, according to Harbour & Associates, a manufacturing consultancy in Troy, Michigan. The time was the slowest of all major automakers. Toyota's average was 21.8 hours.

To catch Toyota in productivity and to match General Motors Corp in outsourcing, or work completed by outside suppliers, Chrysler would have to cut the 12,000 jobs, McAlinden said.

If the UAW rejects the reduction, Chrysler may balk at building redesigned cars and trucks at plants that have union workers, he said. The company also may resist a union demand for officials to remain neutral in attempts to organize workers at a Mercedes-Benz plant in Vance, Alabama, and elsewhere.

US automakers spend about US$7,500 a vehicle on labor in their own factories and at suppliers, above the US$7,000 for Japanese rivals in the US, McAlinden said.

Asian automakers' share of the US market rose to 32.5 percent in the first seven months of this year from 24.9 percent five years ago. The US automakers' share fell to 60.5 percent from 70.2 percent in the same period.
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