Chrysler: A Week of Whacking Costs
March 14, 2008

By Michelle Krebs

In the past week Chrysler has sold off a unit, closed down another and instituted a mandatory two-week summer shutdown to save money.

Chrysler’s moves could be read as merely a response to the deteriorating economy and slower vehicle sales, but are being seen by some as signs Cerberus Capital Management is whipping the automaker into shape to get it ready for sale.

Mandatory Summer Vacation
On Thursday, Chrysler CEO Bob Nardelli announced virtually all salaried and hourly workers would be required to use two weeks of their vacation time in July to allow for a global company-wide shutdown to cut costs. Only essential personnel will remain on the job during the weeks of July 7 and July 14.

In the e-mail message outlining the plan, Nardelli said the shutdown would allow Chrysler “to create better alignment and efficiency across organizational lines and boost productivity.”

Summer shutdowns are common in Detroit. General Motors and parts of Ford generally shut down for two weeks in June or July. But the sudden change surprised Chrysler employees.

Chrysler Sells Plant in Brazil
On Wednesday, Chrysler announced it had sold its engine plant in Brazil to Italian automaker Fiat. Chrysler did not disclose how much Fiat will pay for Tritec Motors, once operated as a joint venture between Chrysler and BMW for PT Cruiser and Mini engines.

However, Fiat said it would spend $130 million to convert the plant to produce its new range of gasoline and flex-fuel engines.

The sale of the plant also suggests the Chrysler PT Cruiser, for which the plant supplies some of its engines, has moved a step closer to the its expected demise. Already Chrysler has eliminated the convertible version from the PT Cruiser line.

California Design Studio Closes
Last Friday, Chrysler announced it is closing its Pacifica Advance Product Design Center in California. The studio’s operations, Chrysler said, would be moved to its Auburn Hills, Mich., headquarters.

Chrysler’s convoluted statement on the closure said: "Increasingly, we are leveraging resources worldwide, forming new joint ventures and alliances and consolidating operations in order to better achieve global balance and manage fixed costs. These moves are designed to help Chrysler become a more globally focused manufacturer, with design, engineering, sourcing and a local presence to serve local customers… These changes set the stage for Chrysler's future global growth efforts, which also include our intent to establish global expertise in design, engineering and sourcing through centers of excellence. These actions will help the Company meet its long-term globalization goals.”

Photos by Chrysler
1 — Chrysler CEO Bob Nardelli, left, awards the 25,000th Dodge Viper to roll off the line at Chrysler's Conner Avenue Assembly Plant in Detroit this week to Kurt Busch, driver of the No. 2 Miller Lite Dodge in the NASCAR Sprint Cup Series.

2 — 2008 Chrysler PT Cruiser

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