Chrysler cuts hit local suppliers, too

By Alex Gary and Nate Legue

BusinessRockford.com

Local suppliers are dropping their third shifts in response to Chrysler’s official announcement today that it will eliminate graveyard-shift workers at its Belvidere assembly plant.

While the plant will cut 1,000 jobs as part of a nationwide cost-cutting measure, the collateral damage will affect half a dozen or more suppliers who deliver doors, build wheel assemblies or other parts for the automaker.

Oakley Sub Assembly was one of the suppliers who built plants in Belvidere in response to Chrysler’s $419 million retooling in late 2005. The company has 60 workers who make tire and wheel assemblies.

“If they drop a shift, we’ll have to drop a shift,” said Mike McNulty, Oakley plant manager. “We can’t supply to nobody. We’ll end up cutting 14 employees.”

Chrysler’s cuts will have far-reaching effects on Boone County manufacturing because the plant’s assembly model relies on just-in-time delivery of parts from nearby third-party suppliers. That means that jobs once done inside the plant are now outsourced to smaller companies. Third-party suppliers provide jobs for more than 2,000 automotive workers outside the Chrysler plant.

Chrysler issued a news release at 9 a.m. today detailing the shift cuts that will reduce its national work force by 15 percent and eliminate four vehicle offerings. Some of the cuts were leaked Wednesday and today’s news release detailed even deeper reductions than anticipated.

Nationally, the automaker will cut 8,500 to 10,000 hourly jobs and 2,100 salaried jobs through 2008. The company already had begun cutting 1,100 temporary workers Wednesday. It will eliminate shifts at five North American assembly plants and halt production of the Dodge Magnum wagon, the convertible version of the Chrysler PT Cruiser, the Chrysler Pacifica crossover and the Chrysler Crossfire sports car.

“These actions reflect our new customer-driven philosophy and allow us to focus our resources on new, more profitable and appealing products,” Jim Press, Chrysler’s new vice chairman and president, said in a statement. “These product actions are all in response to dealer requests.”

The cuts come in addition to the 13,000 layoffs Chrysler announced in February as part of a massive restructuring plan. Those cuts included 11,000 production jobs and 2,000 salaried jobs. The new round of cuts was expected to involve buyouts or early retirement packages similar to those made in February.

Chrysler officials said falling demand for vehicles in the U.S. market made the cuts necessary. Chrysler’s sales were down 3 percent in the first nine months of this year, according to Autodata Corp., and the company said it expects sluggish sales to continue in 2008.

In Belvidere, where workers make the Dodge Caliber, Jeep Compass and Jeep Patriot, slow sales of the Patriot and Compass contributed to the problem. Workers in Belvidere were on pace to turn out 350,000 Calibers, Compasses and Patriots, but dealers worldwide were only on pace to sell about 295,000.

“The market situation has changed dramatically in the eight months since Chrysler established the Recovery and Transformation Plan as its blueprint,” Bob Nardelli, Chrysler’s chairman and chief executive, said in a statement.

As part of the new plan, along with the Belvidere, shifts will be cut at the vehicle assembly plant in Toledo, Ohio; Brampton, Ontario; Jefferson North in Detroit and a plant in Sterling Heights. Also, jobs will be cut at the company’s Mack Avenue engine plant.

The announcement comes less than a week after Chrysler workers represented by the United Auto Workers union ratified a four-year contract with the automaker. The agreement passed by a slim margin after a six-hour strike. The Belvidere plant and Jefferson North were among the plants that voted against the agreement, while the Sterling Heights plant voted for it. All the plants except the Toledo plant are covered by the contract, which promised $15 billion in investment at U.S. plants through 2011.

Chrysler became a private company in August when DaimlerChrysler AG, now called Daimler AG, sold 80.1 percent of Chrysler to the private equity firm Cerberus Capital Management LP. Nardelli said earlier this week that the company is focused on amassing cash for its turnaround effort.

The Associated Press contributed to this report.

 Staff writer Alex Gary may be reached at 815-987-1339 or agary@rrstar.com. Staff writer Nate Legue may be reached at 815-987-1346 or nlegue@rrstar.com.

Loading commenting interface...