DaimlerChrysler axes Mitsubishi jobs

Schrempp's committee will oversee new product strategy

Japanese car maker Mitsubishi Motors is to cut 14% of its workforce, or about 9,500 jobs, as part of a global restructuring by its largest shareholder, the troubled German-US giant DaimlerChrysler.

The move will entail closing one of the company's four existing car assembly plants and result in a 20% reduction in production capacity.

The announcement came ahead of a press conference on Monday where DaimlerChrysler announced details of a far-reaching corporate shake-up and a group-wide 49% fall in underlying profits to 5.2bn euros ($4.8bn).

The conference also revealed that the lion's share of the previously announced 26,000 job losses in the US will happen this year.

Chrysler's troubled year

Operating profits at the troubled US Chrysler unit are down 90% to 0.5bn euros compared to 5.2bn euros the previous year, with the company forecasting losses of between 2.2bn and 2.6bn euros this year.

Daimler Chrysler
Operating profit targets

2001 - 1.2-1.7bn euros

2002 - 5.5-6.5bn euros

2003 - 8.5-9.5bn euros

DaimlerChrysler's Chief Executive, Jurgen Schrempp called Chrysler's year "extremely difficult," adding that the situation in the US had "dramatically worsened," due to the combination of intense competition in the US, higher spending on incentives and costs associated with new model launches.

But Mr Schrempp says that the restructuring will see Chrysler return to "modest profitability" by 2002.

The cost of change

Mr Schrempp expects the restructuring measures to bring annual benefits of 7.2bn euros ($8.1bn) by 2003.

But the cost of turning around the company could rise to up to 4bn euros.

The desired benefits of restructuring

2001 - 3.3bn euros

2002 - 5.2bn euros

2003 - 7.2bn euros

Since December 2000, several key measures have been announced, which include a reduction in overall costs of 15%, a reduction in the workforce of 20% and the idling of six factories until 2003.

The turnaround plan aims to generate additional benefits of profit improvements of 3.3bn euros in 2001, rising to 5.2bn euros in 2002 and 7.2bn euros in 2003.

Board meeting

The company's board had earlier held a seven-hour meeting on Friday to discuss a shake-up of senior management.

Timeline of US job cuts

12,000 by mid 2001

19,300 by end 2001

23,500 by end 2002

26,000 by end 2003

Members of the board reportedly approved a radical plan by Mr Schrempp to create a new executive committee.

The committee would oversee many of the group's divisions.

"There is full support from the board," one source said.

As part of the plan, Mr Schrempp will take control of the new "executive automotive committee".

Jürgen Hubbert, who currently heads the Mercedes-Benz and Smart passenger division, will serve as Mr Schrempp's deputy.

The committee would oversee the group's Mercedes-Benz and Chrysler divisions, and supervise the group's new product strategy.

The new centralised committee would replace a previous system of management with separate automotive, sales and marketing councils.

Previous job cuts

Last month the group confirmed it was cutting 26,000 jobs - equivalent to one in five of its workforce - in a drive to pull out of the red.

Planned vehicle launches

Jeep Liberty - 2001

Dodge Ram - 2001

Dodge Viper - 2002

Dodge Durange - 2003

At the press conference this morning, the company revealed that the timeline of those job cuts, with most jobs to go this year.

Six plants, mainly in South and Central America, will be mothballed next year, with shifts cut at some US and Canadian factories, the firm said.

The announcement came at a difficult time for major US carmakers, all of which have reduced output in response to shrinking sales and growing competition from Asian and European rivals.

The DaimlerChrysler group announced a 49% fall in underlying profits to 5.2bn euros ($4.8bn) last year.