Chrysler layoffs hit Kokomo

Publication date: Saturday, December 2, 2000

By MARC B. GELLER

Tribune staff writer

and The ASSOCIATED PRESS

Some 16 percent of the roughly 9,000 workers employed at DaimlerChrysler Corp.'s Kokomo plants will be on layoff next week, according to statements made Friday by a spokesman for the Big Three automaker.

"For next week, there will be some people down at Kokomo Transmission and Indiana Transmission (plants)," said Trevor Hale, the Chrysler Group's public relations manager for manufacturing and labor. "I think 500 from Kokomo Transmission and 900 from Indiana Transmission," Hale said when asked how many workers would be affected. "I don't know what the (Kokomo) Casting (Plant) figure is," he added. "There might not be any from there."

Looking beyond next week's layoffs, Hale said, "For the following weeks, I don't have any numbers yet. I'm not sure. É We'll know next week." The layoffs scheduled at KTP and ITP the week of Dec. 4 are "based on the assembly plants that will be down," he said. DaimlerChrysler announced Friday that it will idle two of its U.S. assembly plants next week, one in Newark, Del., and one in Hazelwood, Mo.

"It's balancing inventory is what it is," Hale said, explaining the reason behind the layoffs and temporary plant shutdowns.

Chrysler reported U.S. sales of 184,000 in November, a decline of 5 percent compared to the same month last year, and the company is trying to reduce its bloated inventory of unsold vehicles.

"Ford (Motor Co.) and (General Motors Corp.) are down as well with sales," Hale said. "They are also idling plants. So it's a soft market, and we're dealing with a very competitive, saturated marketplace. And the combination of the soft market and excess in inventory required us to take some action to balance our inventory better."

Commenting on the possibility of pay cuts for DaimlerChrysler's hourly employees - which would require opening negotiations with the United Auto Workers - Hale said discussion of such action is "just speculation."

With regard to reductions in overtime, the spokesman said, "We have cut overtime where we need to. Some (employees) are working overtime. It just depends on the product and depends on the week."

Hale added it's "too early to tell" what workers can expect in terms how their profit-sharing bonus checks will compare to the previous year's.

All told, the troubled Chrysler division says it will idle several of its U.S. and Canadian assembly plants in the next three weeks to cut inventories of unsold vehicles. Chrysler's three Kokomo plants are not among those scheduled to be idled.

The company said Friday it would idle two plants next week, one plant the week of Dec. 11 and five plants the week of Dec. 18. The first week's shutdowns will affect 5,500 workers, while the second will affect 2,000 and the third will affect 19,200.

Workers will get 95 percent of their regular pay under contracts with the United Auto Workers.

Chrysler did not say how the shutdowns would affect its other parts-making plants, such as metal stamping and engine assembly, in the United States and Canada.

However, Delphi Automotive Systems, one of Chrysler's parts suppliers, issued a press release Friday warning of plans to temporarily lay off 1,700 hourly employees at its Michigan, New York and Ohio facilities.

"Delphi is moving quickly to adjust production to meet customer demand," said J.T. Battenberg III, Delphi chairman, chief executive officer and president. "Overall customer schedules in the automotive industry are softening, and we are taking steps to prepare our company for reduced volumes and intensified economic and competitive pressure in the coming months. We continue to closely monitor customer schedules."

While DaimlerChrysler's total U.S. sales of cars and trucks dipped 5 percent in November, sales of its key minivans tumbled 16 percent.

The decision to shutter several of its assembly plants comes at a time when the company is struggling to handle the slowdown in the U.S. auto market. This week Chrysler idled three plants and 13,600 workers in Detroit, Toledo, Ohio, and Ontario, Canada to cut inventories. In November, it closed seven plants for a week -- a move that surprised DaimlerChrysler Chairman Juergen Schrempp and eventually led to the ouster of Chrysler President James Holden.

In addition to the two plant shutdowns scheduled for next week, the Pillette Road plant in Windsor, Ontario will be shuttered the week of Dec. 11, and the following week DaimlerChrysler will idle plants in Belvidere, Ill., Detroit, Hazelwood, Mo., Toledo, Ohio and Brampton, Ontario.

Jamie Jameson, Chrysler's vice president for sales and marketing operations, said the shutdowns will cut about 50,000 vehicles from Chrysler's inventories. He said the company was aiming to have a 70 to 75 days' supply of vehicles -- 470,000 to 480,000 -- by the end of December, down from about 80 days' supply at the end of October.

The industry standard for inventory is usually 60 days' supply, but GM and Ford also have been holding more than that in recent months. GM also has idled plants to reduce inventories, while Ford's inventories have been affected by parts shortages.

Jameson said the 16 percent drop in minivan sales appeared to be fallout from the company's struggles with its sales earlier this year. The company's minivans account for about 40 percent of the vehicles it sells each year, and make a significant share of its profits as well.

Chrysler has admitted it overestimated demand for older 2000 model year minivans, which forced it to use incentives of up to $4,000 to clear out the old models to make room for the new 2001 versions.

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-- Martin Thompson (mthom1927@aol.com), December 03, 2000