Newark Blog

Noah Scott asked:


The Chief Executive of DaimlerChrysler Dieter Zetsche is under pressure as it decides on the fate of its money-losing Chrysler Group. But according to some reliable sources the automaker is open to any offer coming from US automakers that are willing to take the rein over Chrysler.

The big question now is which company is interested enough in buying the Chrysler unit. According to a German magazine, DaimlerChrysler is already negotiating with General Motors but for the meanwhile DMX officials would like to keep quiet on the matter. “I cannot and will not go into any further details,” Zetsche said during an interview.

The mention of General Motors as a possible buyer of Chrysler has aroused various reactions. Although it is true that GM is still the world’s largest automaker and producer of the most popular brand of auto parts like GM fenders, but it is also no secret that the numero uno is also facing financial difficulties and purchasing another money-losing brand may not be a good move for the automaker. But then again Chrysler has some very good models and so does GM. For now all we can do is to wait and see for developments.

Aside from the possible sale of Chrysler, DMX has also announced 13,000 job cuts as part of the company’s recovery plan. The said job cut will affect 11,000 DC employees in the US plus 2,000 in Canada. For the US alone 2000 white collar jobs along with 9000 UAW jobs are going to be cut which will result to the closing of an assembly plant in Newark, Del and a part distribution center in Ohio. The Newark plant builds large SUVs for DC. Truck plants in Michigan and Missouri are also going to be affected reducing production capacity to 400,000 units.

Over the weekend the pressure on Zetsche to let go of Chrysler intensifies. According to one DaimlerChrysler shareholder Henry Gebhardt, DWS fund manager in an interview with a German newspaper, “This needs to be an option that must be examined again and again.” He also compared the DaimlerChrysler breakup to BMW’s sale of Rover saying that “It would be irresponsible for Daimler management to exclude this option.” DWS is Germany’s largest fund company and owns less than 1% of shares on DaimlerChrysler.

In fairness to Zetsche he is doing all he can to save Chrysler and recently he held meetings with the United Auto Workers Union asking for the same health care concessions that the union gave General Motors and Ford Motors. Unfortunately the union refused Chrysler saying that the German Company has deep pockets to pay for workers’ health care. Zetsche will still try to work it out with UAW but he also made it clear that if the UAW will refused to accept the new terms that will be set by DaimlerChrysler then he is left with no other option but to let go of Chrysler.

According to some sources the problem with Chrysler Group began nine years ago after the merging of Daimler-Benz and Chrysler. Mid-level managers at Mercedes have resisted any collaboration that could tarnish the luxury brand’s image which is not entirely a bad thing if it has not hinder the Chrysler Group from achieving the level of synergies that it has promised in 1998.

Thomas LaSorda said that the recovery plan that was outlined by DaimlerChrysler can strengthen Chrysler’s position in the North American market and at the same time create the underpinning for a new business model that is geared to a possible global growth and a shift to more fuel-efficient models. The plan if put into action would help DC a regain profitability by 2008 and an approximately 2.5% sales retune by 2009. In the year 2006 Chrysler lost $1.5 billion while DaimlerChrysler overall earnings reached $7.3 billion for that same year.



FUERSTENBERG

Glady Reign asked:


The ambience is bleak so are their faces. They knew it is coming but there seems to be no way out. To Chrysler’s workers in Delaware, the austerity never felt that bad. Well, not until the job-losing spell is cast. The announcement about plant closures and job cuts crushes them into smithereens.

Chrysler’s workers are anxious about the outcomes of the slump in demand and sales of the automaker’s vehicles. However, it still struck them hard when the announcement was conveyed to them. At Newark, Delaware, there is no better proof of the challenges facing DaimlerChrysler AG’s Chrysler Group and its workers than the rows of Dodge Durango sport utility vans built down the road at the automaker’s assembly plant.

The Dodge Durango’s sales dropped 39 percent last year compared to that of 2005. With the increase of gasoline prices and the shift of the market to small fuel-efficient cars, Chrysler had little to offer customers. This is primarily due to the fact that 70 percent of its sales depend on fuel-thirsty trucks.

Earlier, the automaker has declined to go into details when asked about the thing they call as Project X. However, last Wednesday, the much-awaited revelation happened as scheduled. Chrysler has finally announced its widely expected restructuring plan that necessitates slashing of at least 11,000 hourly and salaried workers and the closure of at least two factories in the United States and this is including the Newark Assembly. The plan dubbed as Project X is formulated to transform Chrysler into a leaner and more competitive company that will bloom by working more closely with its German parent Mercedes-Benz in producing vehicles.

The situation elicits various reactions from the workers. Harry McHenry, an 83-year-old retiree from Newark Assembly, said, “I wouldn’t want to be in their shoes today or working in manufacturing. The big SUVs are too expensive to fill up.” He could wish to assemble Volvo plugs but to no avail - for he is stranded in the doomed plant.

Lee Cross, a forklift driver who has 27 years seniority said, “The public gets to make the decision whether we stay open by what they buy.” Cross is 45 years old and he turned down the Marine Corps at age 18 and went to work at the Newark Assembly. “If the plant closes,” he said, “it’s going to have a big impact on this town.”

Kenneth Malin, also a co-owner of Malin’s Market and Deli, said, “Chrysler’s just like any other business. If their costs exceed revenue, they have to do something.” He added, “Obviously, people have moved away from big SUVs.” The restructure plan could save the automaker but one thing is sure about the whole deal: it will force a painful reality on the lives of the workers and other businesses linked to it - from Detroit, Windsor to Newark. Malin predicted that business could drop five percent to seven percent if the factory is shattered.

The Newark Assembly has been on a one-week-on, one-week-off rotation since July last year. This gives workers more time to worry about their future. “People have been on edge for weeks, waiting and waiting,” said Dan Benson, a 41-year-old mother of one with 16 years at Newark. “There’s been a lot of crying, a lot of people worried about losing their homes and worried about what they would do next.”

DaimlerChrysler is not alone in this plight. General Motors and Ford Motor Co. are included in the chaotic scenario in the United States. In addition, analysts are predicting that industry retrenches will intensify in the next few years. Delphi Corp., a bankrupt auto supplier, intends to close 21 of its 29 plants in the United States. Ford plans to close 16 plants by 2012 and GM will shut down 12 factories by the end of 2008.



STOY

Anthony Fontanelle asked:


DaimlerChrysler AG’s supervisory board arrived in Auburn Hills to finalize its major restructuring plan. The details of its restructuring plan that is tagged as its “biggest gamble” will be announced on Wednesday.

Analysts in the industry anticipate that some 10,000 blue-collar jobs and 1,000 salaried positions will be slashed by the company in accordance with its restructuring plan. The Chrysler Group is also expected to strengthen ties with its German parent - Mercedes-Benz. The dramatic overhauling is aimed at coping with the projected $1.2 billion loss of the company in 2006.

Despite the remarkable clamor of German investors regarding the sale of Chrysler, its board is firm in its stand not to sell it. Instead, the board entertained the controversial restructure plan dubbed as “Project X.” The strengthening of bond between Chrysler and Mercedes-Benz luxury division is expected to create compact and efficient cars that would rekindle the old flame of the automaker to enthusiasts.

“Project X” is penned by top Chrysler executives. The said plan is also the biggest gamble of Dieter Zetsche, DaimlerChrysler’s chief executive, since early 2006 when he took over the company. People familiar to the plan said the 20-member supervisory board will begin meeting today, but they would not vote until Wednesday morning on the wide-ranging restructuring plan. They said “Project X” covers significant plant closures and shift reductions at Chrysler’s factories in the United Stats and Canada. The plants predicted to close include an engine plant in Detroit and an assembly plant in Newark, Delaware.

Zetsche, as head of the Chrysler for five years now, triggered ambitious growth for the former number three automaker in the United States. It can be recalled that Chrysler was acquired by Daimler-Benz AG in 1998. However, when the brand stumbled last year reporting a total loss of $1.5 billion for the third quarter, German shareholders expressed their willingness to purchase the brand. But the company decided to move on through a recovery plan that aims to stabilize its sales and operations. “From now on, it is Zetsche’s Chrysler,” said Juergen Pieper, chief auto analyst at Metzler Bank in Frankfurt. “The whole thing is his baby.”

Zetsche and Tom LaSorda, chief executives of the company, will present “Project X” to the supervisory board this Wednesday for its approval. Details of the plan are set to be unleashed by LaSorda after approval. They will be announced together with the company’s financial report for 2006.

The restructure plan is in essence, similar to that of General Motors and the Ford Motor Company. Basically, it will include a number of plant closures, job cuts and buyouts. Terry Ammons, a veteran of 33 years with Chrysler, said a buyout could be attractive for some longtime workers. Ammons added, “We have quite a few people at Mack with 35 years experience. If there was a package, they would probably take it.”

In Newark, Del., UAW Local 1183 President Richard McDonaugh Jr. sent an e-mail to workers telling them not to believe all the rumors that have spread like wildfire. “Everyone’s just waiting for Wednesday,” said Al Grandell, 49, of Newark, a 31-year Chrysler veteran. “Everybody’s bracing for the worst.”

“Project X” will also cover the introduction of new cars that are designed to appeal to a wide consumer base. These vehicles are not only efficient, functional, stylish and fuel-efficient - they also incorporate innovations and new auto systems to take driving experience to a new level. Auto parts accessories like engines, suspension, radiators, EBC brake rotors, cooling system and safety features are to be improved to serve driving demands better.



PINSON

Anthony Fontanelle asked:


Anxious Chrysler workers fear the restructuring plan of the automaker could bring the worst. Along with the increasing job cuts and plant closures is the fear of a bleak future.

Steve Laube, 49, is an electrician at DaimlerChrysler AG’s Jefferson North Assembly Plant in Detroit. At present, he wonders if there is still a future in producing vehicles. Laube is so low in the seniority list and so he was laid off last month. Job cuts were triggered by the declining demands for the plant’s vehicles that include Jeep Commander and the Cherokee.

Like any other Chrysler workers, Laube fear the forthcoming restructuring announcement from the automaker. Analysts earlier said that the restructure could cost some 10,000 production workers their jobs. “We hear they’re going to call it the Valentine’s Day massacre,” Laube said as he and other laid-off workers prepare for “jobs bank” duty.

Laube has heard all the rumors surrounding their situation. According to predictions made earlier, two Chrysler plants will cease its operation and buyouts or early retirement package similar to those of Ford Motor Co. and General Motors Corp will be also offering the same. “They don’t clue us into anything,” Laube said. “You just hear rumors, rumors, rumors.”

Analysts in the industry predict another 1,000 to 1,500 salaried workers could lose their jobs when Chrysler Group decides to unite its domestic rivals to reduce factory capacity to match low demand for vehicles.

Most of the job cuts will affect truck plants. This impending dilemma is brought by the shift of the auto market to small fuel-efficient cars. Chrysler lost $1.5 billion in the third quarter of the previous year. The company’s sales were down by seven percent in 2006.

Chrysler’s trucks and large sport utility vehicles account for about 70 percent of the company’s American sales. The said figure is significantly more than any other automaker.

Kevin Reale, an industry analyst for AMR Research Inc., said the automaker probably has 15 percent too much manufacturing capacity and they have to step on the brakes to slow it down. “They’ll have to trim out some assembly facilities to bring their capacity to produce vehicles in line with demand,” he said.

Other analysts added that the Mack Avenue Engine Plant 1 in Detroit, with about 530 employees, has a possibility to entertain plant closure because it makes the 4.7-liter V-8 engines that are mated to slow-selling trucks.

Also anticipated in GM’s plant closure plan is the 2,100-worker plant in Newark, Delaware. The said plant is responsible for the manufacture of the Dodge Durango and the Chrysler Aspen. These vehicles failed to satisfy the expectations of the automaker.

Erich Merkle, an industry analyst at IRN Inc. in Grand Rapids, said a 2,330-worker plant near St. Louis in Fenton, Mo., that makes Ram pickups also is on his list because Chrysler has two other plants that make the Ram.

Chrysler declined to give further details regarding which plants are on the blocks. It added that information involving the same will be released with the company’s earnings for the previous year.

Catherine Madden, an auto industry analyst at the consulting company Global Insight Inc., said, “The most vulnerable are plants that make the mid-sized SUVs, which have fallen out of favor with buyers. Chrysler was very traditional on where they were in truck segments, a single platform with a single model with it. It’s just not competitive from a manufacturing perspective.”

Robbyn Taylor-Higgs, 50, a 27-year veteran of the Newark plant, is aware of the forthcoming closures. With the Durango sales down by about 39 percent, closing is deemed just around the corner.

“We’re all on pins and needles right now,” Taylor-Higgs said. “It is scary. Something always comes up to save us, but I think this time it’s different. With the Germans owning us now, I don’t think the American spirit is behind us.”



TURLINGTON