Chrysler to Announce Job Cuts, Plant Closings

MICHELINE MAYNARD
NYT

AUBURN HILLS, Mich., Feb. 13 — The Chrysler Group is set to announce a restructuring plan Wednesday aimed at securing its place in the crowded American car market — and within DaimlerChrysler.

The plan is 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 $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 American 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 2006, when he became DaimlerChrysler’s chief executive.

Throughout the 1990s, and while Mr. Zetsche was in charge, Chrysler kept its hold on third place in the American 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 American and Asian rivals were shifting to build smaller, more fuel-efficient vehicles that buyers sought when gasoline prices spiked above $3 a gallon.

Last year, DaimlerChrysler, including Chrysler and Mercedes, was unseated by Toyota of Japan as the third-biggest carmaker in the American market, behind General Motors and the Ford Motor Company.

DaimlerChrysler could reclaim third place this year simply because of shifts by its rivals. Ford, which lost $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 $1.5 billion on an operating basis during the third quarter after a profitable first half, will post an operating loss of at least $1 billion for the year.

Adam Jonas, who follows European automakers for Morgan Stanley, said he expected Chrysler’s operating losses to continue through 2007, given the costs it will incur from its restructuring plan.

Another challenge facing Chrysler is its reputation in the marketplace. Even though Chrysler has rolled out more fuel-efficient models in the last year, like the small Dodge Caliber and the Sebring sedan, its image is still that of a company that relies on Jeeps and trucks.

Indeed, at last week’s auto show in Chicago, Chrysler’s presentation focused on three new versions of its big pickup trucks, with actors playing construction workers. By contrast, G.M. showed off its new Saturn Astra hatchback and the Pontiac G8 sedan, and Ford promoted its decision to bring back the Taurus name after retiring it late last year.

To be sure, Chrysler and the other Detroit companies are fending off a challenge from Toyota, whose big new Tundra pickup went on sale Monday.

But it will be tough for Chrysler, whose marketing strategy gives it the most masculine appeal of the Detroit auto companies, to convince buyers that it has more than big vehicles, said Ron Pinelli, president of Autodata Incorporated, a company that tracks industry statistics.

“If the company keeps doing what they’re doing, they’re going to become much less relevant,” Mr. Pinelli said.

Chrysler’s mission includes removing any doubts at its parent company about whether to keep Chrysler in the fold. Last fall, DaimlerChrysler’s chief financial officer, Bodo Uebber, refused to rule out a spinoff, although officials including Mr. Zetsche subsequently insisted that the idea was not under consideration. DaimlerChrysler shares closed up 79 cents, to $64.45, on the New York Stock Exchange yesterday.

This week, a German investment company, DWS, which holds a small stake in the company, said that Mr. Zetsche should sell Chrysler, not try to fix it again.

Chrysler dealers, for their part, are eager for the company to regain momentum.

Last year, dealers complained when their inventories soared 50 percent above the norm, on top of as many as 100,000 vehicles that Chrysler built and parked in lots around metropolitan Detroit because it did not have orders for them.

Those vehicles that were built on spec are largely gone, and dealers will soon get shipments of the latest version of Chrysler’s minivans, still the leading player in a market where Japanese and Korean companies have gained a strong foothold.

Scott Stone, general manager of Doug Lewis & Sons, a Chrysler dealership in Henderson, Tenn., said he would like Chrysler to trim its lineup of vehicles that are too similar, like the Dodge Nitro, Dodge Durango and Chrysler Aspen, all S.U.V.s that he sells alongside Jeeps.

“They could drop a few lines,” Mr. Stone said. “There’s so many that are so close to each other, I think what you end up doing is confusing the consumer."

Nick Bunkley contributed reporting.