DaimlerChrysler said Wednesday its struggling Chrysler division will cut 13,000 jobs — including 2,000 positions in Canada — as it embarks on a massive restructuring to cut its losses.

The cuts include 11,000 hourly positions over the next three years, along with 2,000 salaried workers over the next two years. The job cuts amount to about a sixth of Chrysler's North American workforce.

Buzz Hargrove, head of the Canadian Auto Workers union, called the job cuts an "absolute disaster."
(Aaron Harris/Associated Press)

The company said 1,100 Canadian jobs will be eliminated this year. Of the 2,000 jobs being lost in Canada, 1,300 are in Windsor — currently home to 5,500 Chrysler employees who build SUVs and minivans. Another 345 positions are being chopped at Chrysler's Brampton operations. 

Brampton was spared even bigger cuts when the automaker selected it to produce its latest muscle car, the 2008 Dodge Challenger.

The Brampton plant also produces the popular Chrysler 300, the Dodge Charger and the Dodge Magnum.

Production cuts

Chrysler also announced it will cut its total annual production by 400,000 vehicles.

Chrysler restructuring plan

• 13,000 job cuts in North America, 2,000 in Canada. • Elimination of shifts at Newark, N.J., sport utility vehicle plant, and Warren, Mich., truck plant in 2007. • Elimination of a shift at a St. Louis, Mo., minivan plant in 2008. • Closure of the Newark assembly plant in 2009. • Closure of a parts distribution centre in Cleveland, Ohio, in December 2007. • Vehicle production cut by 400,000 annually.

Chrysler chief executive officer Tom Lasorda said his company has been hit hard by rising gasoline prices and a rapid shift in consumer trends away from the company's traditional strength in minivans, trucks and sport utility vehicles.

"Our inventories were not aligned with the changing market, and we had to bite the bullet and reduce production to better balance with dealer orders," he said at a news conference at Chrysler's headquarters in Auburn Hills, Mich.

DaimlerChrysler chairman Dieter Zetsche said the company is looking at "further strategic options with partners" for Chrysler.

"In this regard we do not exclude any option in order to find the best solution for both the Chrysler Group and DaimlerChrysler," Zetsche said. Analysts said that could mean the sale of the entire Chrysler division.

That prospect helped to send DaimlerChrysler's stock up $5.33, or more than eight per cent, to $69.78 US on the NYSE. 

Hargrove calls cuts 'absolute disaster'

Canadian Auto Workers union president Buzz Hargrove called the job cuts an "absolute disaster."

"This is a huge hit to us," he said during a news conference in Toronto.

Hargrove said the changing dynamics of the auto market has seen Canada go from the fourth-largest producer of automobiles in the world to eighth place in 2005. He said the country will likely be pushed to tenth by the end of this year as China and India increase their auto production.

Carlos Gomes, a Scotiabank economist who closely follows the auto industry, said the restructuring announcement seems to get the company headed in the right direction, but he added that he was looking for more information on new models.

"You can't just go back to profitability by cutting your way through. You also have to change your product mix," he said.

Restructuring plan

The job cuts are part of a restructuring plan announced after the company's Chrysler Group posted an operating loss of $1.48 billion US in 2006. Chrysler had an operating profit of $2.02 billion US in 2005.

Worldwide, Chrysler shipped 2.7 million Chrysler, Jeep and Dodge passenger cars, sports tourers, minivans, SUVs and light trucks to its dealerships last year, down from 2.8 million vehicles in 2005.

"As a result of lower volumes and a weaker U.S. dollar on average for the year, the Chrysler Group's revenues for the year of $62.2 billion US were significantly lower than in 2005," DaimlerChrysler said in its year-end earnings report.

In 2005, Chrysler's revenues came in at $66.1 billion US.

DaimlerChrysler, which also includes Mercedes plus van, bus and truck units, recorded an operating profit of $7.28 billion US in 2006, compared with $6.84 billion US in 2005. The company's profit increased to $4.3 billion US last year, from $3.8 billion in the previous year.

DaimlerChrysler was the last of the Big Three to announce major restructurings. GM and Ford have already embarked on massive job reduction moves, plant closures and retoolings of their product lines to cut costs and reverse their declining market shares.

All told, GM, Ford and Chrysler will have chopped more than 100,000 jobs once the various restructurings have worked their way through the North American auto industry.