Chrysler planning big Ontario cutbacks: Hargrove

Says restructuring `beyond anything I ever imagined'

Feb 07, 2007 04:30 AM |

Tony Van Alphen | Business Reporter

DaimlerChrysler Canada Inc. plans big production and job cuts in Ontario as part of the auto giant's North American restructuring, union leader Buzz Hargrove says.

"It's beyond anything I ever imagined," a subdued Hargrove, president of the Canadian Auto Workers, said after emerging from a meeting yesterday with senior company brass.

Hargrove and other top union officials could not provide details of the size or location of the expected production and job reductions because of an agreement not to disclose information before the company announces its restructuring plan next Wednesday.

The confidentiality agreement also gives the union a few days to plan its response in hopes of dampening the blow.

"But right now they are talking some very tough numbers," said Hargrove, a former Chrysler worker. "Make no mistake about it. It is significant."

Stuart Schorr, a spokesperson for DaimlerChrysler Canada, said the company would not comment on Hargrove's remarks until next week.

The Detroit News reported earlier this week the Chrysler Group plans to cut 10,000 of a total of 82,000 jobs in North America through buyouts and layoffs. The Chrysler Group, including Canadian operations, lost $1.5 billion (U.S.) in the third quarter, and red ink for the year will probably top $1 billion.

The cuts will mean closing some assembly and parts operations and the loss of shifts.

Although Hargrove would not reveal any numbers, he suggested that Canada may take more than its fair share of cuts.

In Canada, the company employs about 11,500 workers at an assembly plant, research centre and headquarters in Windsor, another assembly operation in Brampton, an aluminum casting factory in the Toronto suburb of Etobicoke and distribution centres across the country.

Although industry insiders could not confirm where the auto maker will cut in Canada, they said the company will likely idle a third shift or more than 900 jobs in Brampton because of slowing demand for the Chrysler 300 sedan, the Dodge Charger sports car and the Magnum wagon.

Production at the Brampton plant dipped less than 1 per cent to 314,161 in 2006 from 2005. But the company has already scheduled five weeks of shutdowns at the plant until mid-March to reduce high inventories.

There has been widespread speculation that the company will add the Challenger sports car to the Brampton operation, but it probably won't be a high-volume vehicle.

Sources say the casting plant in Etobicoke, which employs more than 400, is also in jeopardy. The company has wanted to close the Etobicoke operation for several years and buy parts at lower cost from outside suppliers.

In Windsor, production of the Caravan and Town & Country minivans and the Pacifica wagon slid almost 20 per cent to 291,572 last year. But insiders say that output should remain stable or improve because of the introduction of a new minivan model later this year.

Industry officials say it would be difficult to meet demand if the company chopped a shift in Windsor.

In its report, the Detroit News said the Chrysler Group will likely close an assembly plant in Newark, Del., and an engine operation in Detroit.

Since its merger with DaimlerChrysler AG of Germany in 1998, annual sales in the U.S. have dropped from about 2.5 million vehicles to 2.1 million last year.

In addition to shrinking its operations to match lower demand, the key to the restructuring plan will be a shift to joint development of vehicles and parts for Chrysler and Mercedes models, including small cars, according to the newspaper.

The increasing integration would reduce costs and improve quality at Chrysler, which is still struggling under the merger.

Last year, the Chrysler Group had appeared to avoid the fate of Ford Motor Co. Ltd. and General Motors Corp., which faced massive losses and restructuring. But Chrysler showed signs of trouble by the second half of 2006 as inventories rose dramatically.