The Chrysler Group was set to announce a restructuring plan yesterday aimed at securing its place in the crowded US automotive market -- and within DaimlerChrysler.
The plan was expected to include the elimination of about 11,000 blue and white-collar jobs along with the closing of one and possibly two assembly plants -- in Delaware and Missouri -- people with direct knowledge of the plan said this week. Chrysler may shut smaller plants elsewhere and announce other cost-cutting measures to meet its stated goal of reducing costs by about US$1,000 a vehicle.
Along with those steps, Chrysler may announce a project to share more parts and engineering technology with Mercedes-Benz.
It has largely avoided doing so since the DaimlerChrysler merger in 1998, even though other car companies routinely use the same underpinnings for their different brands.
The restructuring is yet another attempt by Chrysler to remake itself in the face of stiff competition from foreign brands and a shift in taste among US buyers. Chrysler has already had two overhauls this decade -- one major and one of more limited scope -- both under the guidance of Dieter Zetsche, who ran the Chrysler Group from 2000 until last year, when he became DaimlerChrysler's chief executive.
Throughout the 1990s, and while Zetsche was in charge, Chrysler kept its hold on third place in the US market, with a vehicle lineup weighted heavily to sport utilities, minivans and pickups.
Indeed, until last fall, three-quarters of Chrysler's models were light trucks, even though its US and Asian rivals were shifting to build smaller, more fuel-efficient vehicles that buyers sought when gasoline prices spiked above US$3 a gallon.
Last year, DaimlerChrysler, including Chrysler and Mercedes, was unseated by Toyota of Japan as the third-biggest carmaker in the US market, behind General Motors and the Ford Motor Co.
DaimlerChrysler could reclaim third place this year simply because of shifts by its rivals. Ford, which lost US$12.7 billion last year, is giving up its unprofitable sales to rental car companies, a move that will accelerate its decline in market share.
Chrysler's restructuring plan is being unveiled on the same day that its parent announces results for 2006.
Analysts expect DaimlerChrysler to be profitable. But they predict Chrysler, which lost US$1.5 billion on an operating basis during the third quarter after a profitable first half, will post an operating loss of at least US$1 billion for the year.
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