Chrysler to Cut 25% of Salaried Work Force

DETROIT – Chrysler LLC said Friday it will cut 25 percent of its salaried work force starting next month, and the automaker warned that it will make more restructuring announcements in the near future.

CEO Robert Nardelli said the moves are being made as the company "works to find new ways to operate."

Chrysler, which has about 18,500 white-collar workers, also will cut a quarter of its contract employees — those who work for other companies under contract with the automaker.

About 5,000 workers are likely to lose their jobs, although the company would not say how many contract workers it has.

Vice Chairman and President Tom LaSorda said Friday that sales projections for the rest of this year and in 2009 aren't looking good, and he indicated that more factory closures could be coming.

"We have to align our (factory) capacity with what's going on at retail," LaSorda said in an interview with Detroit radio station WWJ-AM. "And that's the tough decisions that we make. And of course, there's probably going to be more if it stays at this level."

On Thursday, Chrysler announced it will cut 1,825 jobs by eliminating one shift at a Toledo, Ohio, Jeep plant and accelerating the closure of its sport utility vehicle factory in Newark, Del., because of the slowing global economy and a shift toward smaller vehicles.

"These are truly unimaginable times for our industry," Nardelli said in a statement. "We continue to be in the most difficult economic period most of us can remember. The combination of troubled financial markets, difficult credit, volatile commodity prices, the housing crisis and declining consumer confidence continues to weigh on the economy. Never before have auto industry sales contracted at such a fast rate," he said.

Chrysler's sales are down 25 percent through the first nine months of the year, the worst decline of any major automaker.

In a memo to employees obtained by The Associated Press, Nardelli urged them to work hard to control expenses. The company, he said, will eliminate some discretionary expenses and cut back on others. Details would be coming through managers, the memo said.

"As an additional cost savings measure, we also will be reducing capital expenditures, but I assure you that we are protecting all major product programs," Nardelli wrote.

He also said the company will have to move faster than it has in the past to restructure.

"We recognize that in order to strengthen our competitive capability, and reduce the time and cost to achieve our objectives, we cannot operate as we have in the past," he wrote. "In the near future, we will be making organizational announcements as a result of restructuring actions reflecting the need to find new ways to operate."

Chrysler's owner, Cerberus Capital Management LP, is in talks to sell the company or merge with another. Discussions are under way with General Motors Corp. and the combined Nissan Motor Co. and Renault SA.


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