By on October 24, 2008

The Wall Street Journal [sub] reports that there’s blood on the carpet in Auburn Hills, as ChyrCo CEO “Boot ‘Em Bob” Nardelli lives up to his TTAC nic. The announcement came in the form of a Dear John letter. “Chief Executive Robert Nardelli said the cuts are necessary because of the deep downturn in the economy and the tightening credit situation, which are choking off auto sales. Mr. Nardelli said the company is facing the ‘most difficult economic period any of us can remember.'” (Bob was speaking professionally, of course.) So, let’;s count the carnage, shall we? One thousand white collar workers were terminated at the end of September. The new cuts are on top of those cuts, which should eliminate another five thousand non-unionized employees. “The employees whose jobs are being eliminated will leave the company payroll Dec. 31, Mr. Nardelli said in the letter. An unspecified number of the 5,000 employees will be offered early retirement or buyout packages. Others will be terminated involuntarily. Those affected will be notified between Oct. 24 and Nov. 5.” Will the last Chrysler employee please turn off the lights? Meanwhile, here’s Bob’s letter…

Dear Employees,
These are truly unimaginable times for our industry. We continue to be in the most difficult economic period any of us can remember. The combination of troubled financial markets, difficult credit, volatile commodity prices, the housing crisis and declining consumer confidence continues to weigh on the economy. Never before have auto industry sales contracted at such a fast rate. Throughout this challenging time for our industry and our company, we have continued to face the realities of our business environment. Working as a team, we have been right-sizing our organization to become as competitive as possible.
As business conditions today continue to decline, and we prepare for economic challenges extending into 2009, additional actions will be needed to re-size our company to remain competitive. Due to the unprecedented conditions in the auto industry, both in our home and international markets, we are targeting a 25 percent reduction in our salaried and supplemental work force. As always, we will strive to do this in a socially responsible way, with respect and gratitude to those who have contributed so much to our company over the years.
Your leadership team will receive the details on new voluntary programs today that will be made available to Chrysler salaried employees beginning in November. These new programs will be available to a broader group than before and will feature enhanced benefits, including both cash and new-vehicle vouchers. Your management will share all the program details with you in the next few days. I hope that every eligible employee takes time to seriously consider these enhanced offerings given the current environment. In addition, it will be necessary to have involuntary separation actions at the end of December, which is why the company is also issuing a WARN act notice today.
We need to work harder and more diligently to control every expense. To that end, we are eliminating in some cases, and cutting back on all discretionary and overhead expenses. Details of this initiative will be communicated through your leadership team. As an additional cost savings measure, we also will be reducing capital expenditures, but I assure you that we are protecting all major product programs.
As we re-size the company to reflect declines in volume, we know we must find new and more efficient ways to conduct our business operations. We recognize that in order to strengthen our competitive capability, and reduce the time and cost to achieve our objectives, we cannot operate as we have in the past. In the near future, we will be making organizational announcements as a result of restructuring actions reflecting the need to find new ways to operate, while still recognizing the importance of focusing on the customer, a relentless commitment to quality and investing in the programs that we need to compete in the marketplace.
I realize the appetite to know what the future holds for Chrysler is tremendous. Media speculation about our fate continues to be rampant. As a matter of company policy, Chrysler does not confirm or disclose the nature of its business meetings, in many cases to comply with legal requirements, as well as protect the integrity of our Company and those with whom we meet. When erroneous reports can be corrected with definitive answers, I support dealing with these issues in a clear and direct manner. I want to assure you that your leadership team is committed to communicating fully and directly to you if, and when, there is something to announce.
The Chrysler team has been through tremendous change over the years through the many ups and downs of this industry. During these tumultuous times, I encourage you to help each other to keep a sharp focus on the important tasks at hand.
Thank you for your continued dedication.
Bob

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21 Comments on “Black Friday Begins: Chrysler Cuts 25% of White Collar Jobs [Text of Letter Below]...”


  • avatar
    menno

    Start the video at 7:08 or 7:09

    http://www.youtube.com/watch?v=9jwDNtCOeu0

    Pretty well describes the world economy. (And Chrysler. And GM.)

    (The little “bad guy” in the video is a pre-AMC Gremlin, just so ya know).

  • avatar
    Redbarchetta

    Should be an interesting day on the stock market today. More job cuts mean more triple digit declines.

    Christmas is going to suck for a lot of people this year, myself included. Oh well it will still be better than the year I got canned from my job on Dec. 22 and screwed out of my Christmas bonus.

  • avatar
    SherbornSean

    This is sad to see, but inevitable.

    I think what it means is that Chrysler no longer has the capability to engineer its own vehicles. To supply vehicles, first they tried a piecemeal approach, talking to nearly every automaker to get their hands on competitive platforms. Then they looked into deeper partnerships and mergers. Now its about getting acquired, and then dissolved.

    Except for the minivans and Jeeps, its hard to think of a Chrysler vehicle that will be around in 3 years. Maybe the Viper, if they can find an entrepreneur with a big enough ego to buy it.

    It shows how out of touch the Chrysler executive team is that this announcement comes a week after they were touting their future with all those electric vehicles. Sort of like bringing out a hybrid SUV and then canceling not just the hybrid, but the entire line-up of SUVs a month later.

  • avatar
    autonut

    We are heading into a miserable times. I don’t know what choices Nardelli has, except chopping his own salary. But in today’s climate one should not expect Lee Iaccoca level of ethics.

  • avatar

    Redbarchetta:
    I feel you there, I got booted out 3 months ago from BAC when this crap happened and was denied severance.

  • avatar
    autoemployeefornow

    You can tell morale is low when all of your co-workers want to be offered a package. They should offer a package to ALL employees to see if they can get 100% to leave. That would lighten the expenses.

  • avatar
    1996MEdition

    RedBarchetta:

    Christmas is about being with family and friends, not stuff. I have had everything short of losing my job happen to me this year (that one is still in the air), father passed, sister terminally ill, wife left, took the kids, never seen them since, lawyer fees out the wazoo, but I am still looking forward to Christmas…..count your blessings.

  • avatar
    NickR

    including both cash and new-vehicle vouchers

    The value of these if Chrysler goes belly up is…?

    Anyway, it’s shame, but having been laid off three times (with measly severance) in 12 years and having been unemployed for almost 3 years in total, I can’t feel too sympathetic.

    A lot of people are suffering.

  • avatar
    AKM

    How about Nardelli firing himself? I reckon that would be “socially responsible”.

    Sorry to hear about the job and family losses…

  • avatar
    Redbarchetta

    1996MEdition sorry to hear about the loss. I shouldn’t have sounded like I was complaining so much, ironicly that was a great Christmas for us, except for the fact I had to sell my Gibson Les Paul and Soldano amp to pay for it, that setup sounded so nice together. I got more time with my 3 y/o which made me realize how that job wasn’t worth the stress or small salary.

    Your right it is about being with your family, just a little depressing when you have 2 young children.

  • avatar
    1996MEdition

    autoemployeefornow:
    offer a package to ALL employees to see if they can get 100% to leave

    they are doing that with hourly at the Kokomo tranny plant

    http://www.kokomotribune.com/archivesearch/local_story_296233420.html

  • avatar
    1996MEdition

    Sometimes it’s easy to lose focus on what is really important until it is no longer there. I can always find a job if needed.

  • avatar
    Robstar

    “re-size” “right-size”.

    Why don’t they call a rock a rock and use “down-size” ?

  • avatar
    menno

    1984. Living in the “farthest out possible” NW Chicago suburbs with a 2 year old son and my wife, I decided it wasn’t the place to be (since crime was rampant and worsening, I had a crap job and could scarcely get by despite a degree). The two jobs prior to my crap job, I walked into work and found out I’d been let go – no reason (except the one place re-hired the person I’d replaced when she failed in nursing college). Picked up sticks, moved to a southern Colorado town. Got a crummy job, but we made do. Lower cost of living and all. One day short of a year, I went to work – no time card. I’d had no “on the carpet interviews” or warnings – the economy was not collapsing in 1985. No job. Went to unemployment, they said “you get 20 cents per month from your prior unemployment in Illinois.”

    So I said **** this place and all you people, too. You want to see my family dead, you *******s. We sold virtually everything and left the country, moved to the UK.

    Oddly enough, we did pretty well – despite not having any real expectations. Until Margaret Thatcher put the afterburners (reheat, in Brit speak) to the economy by dropping interest rates in order to be re-elected; after she was, the rates climbed – a LOT. Since all you can get are variable rate mortgages, guess what? We survived 7 increases of our house payment (up about 80%) by renting out a room to a “lodger”.

    Finally, I’d had enough and we moved back to the USA, where it has not been peachy keen since but we’ve survived.

    Point is – through all of this mayhem and disappointment with how other people have treated me and others like me, I’m now 51 year old and I, just like everyone else, have watched my 401k retirement vaporize in front of my eyes just recently. Fact is, I’ve laid by “other options” because I saw this coming. Yes, I did. So did others. Anyone else a Ron Paul fan out there?

    Thing is, so what if economic armageddon (or more accurately tsunami) comes along? If I do a faceplant because the world economy collapses, and we go into a Greater Depression – what of it?

    If I have to build a 2×4 shack on state land and squat then that’s what I’ll do.

    The fact that I’m responsible, pay my bills, don’t have excessive debt, pay my taxes, save money, live within my means and try to be a good steward means absolutely nothing in the current environment. In fact, quite the opposite since the greedy, layabouts, shiftless and incompetents are getting BAILED OUT WITH YOUR AND MY MONEY.

    Maybe Thomas Jefferson was right and that now and again, it’s best to clear the barnacles off the ship of state with a revolutionary dry-dock.

    Best if done through the ballot box, really, being that I’m pretty adverse to shooting at people. Assuming the ballot box hasn’t already been corrupted beyond recognition.

    The point is, it’s times like the ones coming at us which re-teaches us to value the things of true value. Friends, family, God, helping others when we can, love, true fairness, having enough to sustain our bodies and a sane mind. All the rest is just window dressing.

  • avatar
    1996MEdition

    menno:
    The point is, it’s times like the ones coming at us which re-teaches us to value the things of true value. Friends, family, God, helping others when we can, love, true fairness, having enough to sustain our bodies and a sane mind. All the rest is just window dressing.

    Maybe that is what this country needs. Talk to someone who lived through the depression of the 30’s, they would agree with you. Keep your dignity, conscience, and integrity along with an optomistic outlook. You can’t control what others do to you, but you can control how you react.

  • avatar
    Wolven

    Maybe Thomas Jefferson was right and that now and again, it’s best to clear the barnacles off the ship of state with a revolutionary dry-dock.

    I’ll second and third that… And for those that are a bit scweamish about shooting rats, we can do the French version… you know, with the guillotine.

    Make it a reality show… Let people call in and vote on which politician (vermin) gets voted out (whacked) next. I’m bettin’ it would beat Survivor in ratings.

  • avatar

    menno, I don’t always agree with you but I thought that was a great story and some very insightful commentary.

    I imagine Nardelli’s just trying to snake his way into upper management so he can pull a Home Depot and destroy the company while walking out with a couple hundred million more. These Wall Street clowns and executive suite incompetents have steered this economy right into the wall; even Alan Greenspan had to admit yesterday that his expectation that investment firms would at least act in their own interests was dead wrong. They see that money and throw all caution and care to the wind.

    There is so much greed, so much selfishness, it blinds us all to the things that will really fill the void. It would take a few more years, maybe a decade, of very hard times to actually incite the population to any meaningful revolution. I personally think we’ll turn things around well enough before anything like that happens, but it would be nice if we end up with a more workable economic system when the bleeding’s done.

    Anybody with the greedy self-interest it takes to become a C-level executive should never be trusted with the position, nor should anybody self-important enough to run for high political office.

  • avatar
    menno

    Why do Fridays suck at Chryslebrus? Note the word ALL in this little news clip:

    http://www.lewrockwell.com/blog/lewrw/archives/023646.html

    What a loverly Christmas present for how many US Chrysler employees?

    Will Chrysler simply close up shop and simply rebadge GM cars if the merger goes through?

    Will they close out everything and Chapter 7 it all?

    Alternately, they could “do a Studebaker” and simply concentrate production in Canada (and obviously, nowadays, Mexico).

    This would leave Canadian and Mexican production, only; Dodge Challenger, Dodge Charger, Chrysler 300, Dodge Ram, Dodge and Chrysler minivans and (gak!) the Chrysler PTCruiser. The Hemi V8 is manufactured in Mexico. The part-owned 4 cylinder engine plant in Dundee Michigan isn’t Cerberus’s to close (they only own 1/3). So they’d have 4 cylinder engines (but nothing to put them in since the PTCruiser uses the old engine built in the US). The PTCruiser would therefore, die. And Chrysler would renege on their contracts to take 4 cylinder engines from Dundee, except perhaps for Jeep Patriot production (which they’d have to offshore – could make a quick switch to Toluca, Mexico and replace the PTCruiser on that assembly line). Likewise the Dodge Journey could be moved to Toluca, too, from the US. Perhaps Nissan would be interested in badging a few of them for sale to replace the dead-in-the-water Quest.

    Wrangler and Grand Cherokee production could simply be off-shored to INDIA on contract production, as was recently mentioned in the auto news.

    Their part-owned Dundee Michigan plant could be quickly tooled up to contract manufacture Pheonix V6’s which are “nearly ready.” Quickly meaning, within a few months to a year. (“Thanks for engineering such a nice V6 guys. Here’s your pink slip by way of thanks.”)

    Chryslerbrus could simply order up re-badged Nissan Altima’s and Sentra’s and sell them as the Chrysler Crown and Dodge Neon II – the way things are going now, Nissan’s not likely to say “no way Jose” (my take on a joke since the Sentra is built in Mexico) when they can use all the money they can get. (Hint to Nissan, though; ask for cash up front for the cars…) The Sentra isn’t selling so well for Nissan and they have excess capacity….

    Note that the current Chrysler V6’s and OHC V8 would die with US production. I’m pretty sure Beijing in China manufactures Chrysler OHC 3.7 V6’s so you’d probably see that engine transplanted into the Indian built Jeep Wrangler and Grand Cherokee.

    Note that Studebaker closed down just about the same time of the year in 1963, and by spring 1966, wrapped up Canadian auto production, too. Note also, that by the end of 1964 production, Studebaker relied upon a contract supplier for engines, and essentially sent 80% of their auto profits to this supplier (GM, in fact).

    Watch for Chrysler to ramp up overtime at their 3.8 V6 minivan engine plant in order to supply contractually required minivans to Volkswagen until the Pheonix V6 comes online. Or do a quick re-engineering job to purchase Nissan 3.5 V6’s and transaxles to bolt in (also for VW Routan).

    To recap this scenario would immediately leave AT LEAST these cars available for dealers to order from January 1 2009:

    Dodge Challenger V8 (Canada/engine Mexico)

    Dodge Charger V8 (Canada/engine Mexico)

    Chrysler 300 V8 (Canada/engine Mexico)

    Dodge Ram Hemi V8 and Cummins Diesel (Mexico)

    Dodge Caravan V6 (assuming they could do one of the scenarios outlined above). (Canada)

    Chrysler Town & Country V6 (ditto) (Canada)

    Volkswagen Routan V6 (ditto) (Canada)

    Other cars as noted above could come back on-line within a few months. Assuming the equipment could be moved out of US plants without riots, I mean. Engines are more – problematical. As was the case for Studebaker.

    (Surviving) dealer stocks would not be too badly hurt by temporary production shut-downs as dealers are pretty well swimming in Chrysler stock, now….

  • avatar
    2hard4u

    Inside knowledge…..

    Chrysler will completly shut down for 1 month!

    All plants will be down and all salary on temporary lay offs.

  • avatar
    menno

    Well, 2hard4u, who’s to say that the layoffs aren’t permanent, if Cerberus can’t do a deal to offload Chrysler?

    See the link in my comment above yours.

  • avatar
    Redbarchetta

    Menno that is an interesting theory and I would think it might be possible except for the bailout money from Uncle Sam. If they kill all their US production how on earth can the government justify giving them a penny. Or does the new GMC company get what both companies would have gotten individually and they just count GM US production in the total of both. Damn that makes your theory a lot more possible since our government can’t really be trusted with our money.

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