Chrysler workers dread the worst in restructuring announcement

Chrysler workers have taken to calling it the "Valentine's Day massacre."

Photo: Chrysler workers dread the worst in restructuring announcement

They are referring to Wednesday's restructuring announcement from Chrysler, one that some analysts say could cost 10,000 production workers their jobs.

As workers await the news, rumors fly: Two plants to be shut down; buyout or early retirement offers similar to what Ford Motor Co. and General Motors Corp. did to reduce their hourly work forces; flat-out layoffs.

"We hear they're going to call it the Valentine's Day massacre," said Steve Laube on Monday, as he and other laid-off workers reported to "jobs bank" duty, for which they'll get most of their pay to perform community service work or sometimes just hang around the union hall.

At 49, Laube has eight years in as an electrician at DaimlerChrysler AG's Jefferson North Assembly Plant in Detroit, but he is so low on the seniority list that he was laid off Jan. 1 due to slumping demand for the plant's Jeep Cherokees and Commanders.

"They don't clue us into anything," he said. "You just hear rumors, rumors, rumors."

Chrysler will not say which plants are on the blocks. It says details will be released Wednesday morning in tandem with the company's 2006 earnings.

Analysts predict another 1,000 to 1,500 salaried workers also could lose their jobs as Chrysler Group joins its two domestic rivals in trying to downsize factory capacity to match lower demand for its products.

Much of the shrinkage, analysts believe, will come at plants that make truck-based products, victims of the change in consumer tastes from sport utility vehicles and trucks to more fuel efficient car-based vehicles.

Chrysler lost US$1.5 billion (EUR1.16 billion) in the third quarter of 2006, and its sales were down 7 percent last year. Trucks and bigger SUVs historically account for about 70 percent of the company's U.S. sales, more than any other manufacturer.

Kevin Reale, an industry analyst for AMR Research Inc., said Chrysler probably has 15 percent too much manufacturing capacity.

"They'll have to trim out some assembly facilities to bring their capacity to produce vehicles in line with demand," he said.

Atop almost everyone's list for closure is the 2,100-worker plant in Newark, Delaware, that assembles the slow-selling Dodge Durango and Chrysler Aspen mid-sized SUVs. Analysts say the Mack Avenue Engine Plant 1 in Detroit, with about 530 employees, also is a possibility because it makes the 4.7-liter V-8 engines that go in slow-selling trucks.

Erich Merkle, an industry analyst with the auto consulting company IRN Inc. in Grand Rapids, said a 2,330-worker plant near St. Louis in Fenton, Missouri, that makes Ram pickups also is on his list because Chrysler has two other plants that make the Ram.

But most vulnerable are plants that make the mid-sized SUVs, which have fallen out of favor with buyers, said Catherine Madden, an auto industry analyst at the consulting company Global Insight Inc.

The Durango and Aspen underpinnings are exclusive to those vehicles, contrary to Chrysler's movement toward more flexible manufacturing plants that can build multiple vehicles on one platform, she said.

"Chrysler was very traditional on where they were in truck segments, a single platform with a single model with it. It's just not competitive from a manufacturing perspective," she said.

With Durango sales down nearly 39 percent last year compared to 2005, Robbyn Taylor-Higgs, 50, a 27-year veteran of the Newark plant, is well aware that closing is possible. Talk among the work force is that it will either move to one shift by March 5 or shut down.

"We're all on pins and needles right now," she said. "It is scary."

She's been around long enough to remember the government bailout engineered by Lee Iacocca and other tough times, but believes this is more serious.

"Something always comes up to save us, but I think this time it's different," she said. "With the Germans owning us now, I don't think the American spirit is behind us."Merkle said he can't imagine the United Auto Workers union agreeing to layoffs without buyouts similar to those made by Ford and GM.

No matter what closes, workers who are low in seniority could be bumped from their jobs by more senior workers from other plants.

That's what troubled Laube Monday as he and others waited at the union hall for details on an assignment to build a wheelchair ramp for a doctor's office.

"I'm just trying to see what this is going to bring about," said Laube, father of two children. "If it's not good, I'm going to have to figure out something else."