You know, we're beginning to buy into this idea that the new Chrysler is faster than a speeding bullet– to the back of the head (of course). Five days after the United Auto Workers (UAW) ratified their new contract with the struggling domestic– a contract whose job guarantees were conspicuous by their absence– Chrysler is axing the third shift at its Jeep factory in Toledo. The Toledo Blade reports that the move will take effect in the first quarter of '08, trimming 1,000 salaried workers and 1,100 temporary workers in engineering, finance, procurement and "other areas." Although anyone who's driven the plant's products (Dodge Nitro/JeepCompass) could have seen this coming, the UAW says it was taken completely by surprise. "Local UAW officials said neither they nor local company officials were aware of the planned announcement. UAW Local 12 President Bruce Baumhower said, 'That is news to me.'" The Wall Street Journal says the cuts are actually deeper. Chrysler will also terminate shifts at three Michigan plant: Jefferson North (Jeep Commander and Jeep Grand Cherokee), Sterling Heights (Chrysler Sebring and Dodge Avenger) and their Mack Avenue engine plant. Chrysler CEO Boot 'em Bob Nardelli was taciturn on the bloodletting business. "Mr. Nardelli said the final decision on the cuts came Tuesday during Chrysler’s first board meeting as a private company. 'Those are within the confines of the board and the board’s decisions,' he said of the layoffs. Here we go…
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Good for them. Bob Nardelli may not be a ‘car guy’ but the one thing painfully obvious about Chrysler is that they need to right size the company.
Back in the early 1990’s Chrysler actually rid themselves of nearly a third of their overhead costs… and that made a critical difference in the overall recovery of the company. Although Lee Iacocca, Bob Eaton, and Robert Lutz were eventually given much of the credit for the early 90’s turnaround, fellows like Jerome York and Gerald Greenwald had a lot more to do with the actual survival of the company during lean times.
Parenthetically, I would give the greatest credit to Chrysler’s engineers and certain ‘castoff’ managers from the old AMC for the second coming of Chrysler, but that’s definitely a subject for another rant.
Cry havoc, and let slip the (three-headed) dogs of war?
The Compass is built in Belvidere, Illinois.
I think you mean the Liberty.
“Back in the early 1990’s Chrysler actually rid themselves of nearly a third of their overhead costs … ”
” …. trimming 1,000 salaried workers and 1,100 temporary workers in engineering, finance, procurement and “other areas.” ”
How is it that companies have thousands of people on the payroll who apparently aren’t adding value? How were the decisions originally made to hire all of these salaried people who now suddenly aren’t needed?
I guess because most of my work has been in companies with fewer than 1,000 employees this sort of thing has always befuddled me. How does an organization end up with thousands of “excess” employees in non production jobs? Where they all working feverishly on the Sebring/Avenger duo????
Chrysler just axed the Magnum, Pacifica, Crossfire, and the PT cabrio.
It’s kind of too bad that American Motors didn’t have the leadership and money to buy out Chrysler in 1980 or 1981, and instil in the company the discipline of having to make do with less, i.e. good stewardship of resources.
As it was, apparently a lot of new blood from AMC was what carried Chrysler through the 1990’s after AMC was bought BY Chrysler in 1987 (in order to snag Jeep).
If you are smart enough to not simply grow employment ranks for a sake of fiefdoms (which is always what seems to happen in the big 2.8), then you wouldn’t have to disrupt so many people’s lives by laying them off…
Or to put it another way, look at how successful the Japanese are at maintaining a good and appropriate level of employment consistently – their record is far better than the 2.8.
Back when Mazda had a real problem in 1973 (the 1st fuel crisis, and collapse of sales because of their gas-hog wankel engines), it was a total culture shock for Mazda to lay off people – ultimately it weakened the company until such time as Ford ended up buying a controlling interest instead of a tiny interest in Mazda (which it held since Mazda supplied Courier mini pickup trucks to Ford – remember those?)
Likewise when Nissan nearly went broke – and Renault bought them up. So it happens in Japan, but not nearly as often as it does here in the US.
jthorner,
There are a bunch of reasons that lead to bloated structures full of people with little value.
I saw one first hand. We had a parallel group to our sales force that managed the distributor relationships. When I came into the sales force, the partner group was already too large, but they were always signing up more distributors and partners so they justified growing headcount. I pointed out that we were signing up too many worthless distributors and was bashed by the local manager of this group who went to my boss about my bad attitude.
Fast forward four years and the two groups had practically merged. The parallel group had lost eighty percent of it’s headcount to either lay off’s or reassignments because the company realized they were signing up too many sub standard partners while our group was carrying most of the weight.
Meanwhile, that manager who was all about spreading the business and his favorite employee had moved over to my group. Their strategy? Direct ALL the business to one partner so as to “streamline” the process and get more done. This time, I told them they were headed down the wrong path and we would lose customers because they needed competition among at least a few partners to keep growing the client base.
In four years that partner group had gone from four people up to seven people and back to one. Many of them were laid off, but many were reassigned which only meant more lay offs for more groups later because those people were not the right folks for the job and they actually were often counterproductive.
I was one of the last to be laid off. The manager that bashed me is now a VP. They have lost a lot of market share and their partners are no longer helping them get new business, just milking the existing accounts. I had brought in the vast majority of the new accounts in our area while I was there and had continued to grow the business while the company tanked (the large accounts were buying less overall product while simultaneously giving more of the business to our competitors).
Fast forward another three years. They are exactly where they were three years ago. Finally, they have stopped the bleeding.
Up to 10K more job cuts? Bet the UAW didn’t expect that!
http://www.detnews.com/apps/pbcs.dll/article?AID=/20071101/UPDATE/711010468
I bet the UAW heads knew it was coming. What was their choice? Lose all the business of representing Chrysler employees, or lose some of the employees? So they took the choice that kept more money coming into their coffers. So what.
They will of course deny this, and have all sorts of excuses. Still, they had to know.
Totally agree with Landcrusher. Nardelli might have a reputation for being a bit lacking in compassion, but the top guys on the other side of the table are no different. You simply won’t get to the top of any large social hierarchy by being the kind that pays attention to anything but the climb itself. And you won’t stay there unless all your effort is focused on just that. All you get for being a nice guy is a sharp, looking out for number 1, elbow in the face and a knife in the back. Unions are no different than management in that respect. And hence, neither are their leaders.
Hopefully workers at the foreign transplants pay attention to how much job security the UAW helps provide in exchange for their dues.