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Published: Thursday, 10/23/2008

Chrysler announces Toledo's Jeep North to lose one shift of production

BY LARRY P. VELLEQUETTE
BLADE BUSINESS WRITER

Chrysler LLC announced early Thursday that it will eliminate approximately 825 employees at its Toledo Jeep Assembly complex because of slow sales of its products.

The involuntary layoffs are expected to occur by year s end, but may be offset by attrition as employees take buyout offers that are expected to be offered, The Blade has learned.

The cut effectively eliminates the second shift at the Toledo North plant, where the Jeep Liberty and Dodge Nitro are made. Added production cuts but not job losses are expected to be made at the Toledo South plant where the Wrangler is made.

At this time last year, Chrysler employed nearly 4,000 people in its two plants in North Toledo. By the end of the year, that number could be down to 1,400.

Early this morning, Chrysler LLC formally announced the elimination of the second shift at Toledo North, as well as a related decision to speed up its previously announced closure of its Newark Assembly Plant in Newark, Del., which makes the Dodge Durango and Chrysler Aspen.

The markets are facing unprecedented turmoil and we are in a time of historic change in the auto industry, Frank Ewasyshyn, executive vice president manufacturing for Chrysler said in a written statement.

Chrysler said approximately 825 jobs at Toledo North would be affected, and another 1,000 jobs will be lost when the Newark plant closes Dec. 31.

Chrysler said it "is committed to working with the UAW to address the represented manpower reductions in a socially responsible manner. As the Company has done in the past, the UAW and management leadership will hold employee meetings to review special programs that will be offered at affected locations."

Chrysler eliminated the third shift at the complex in February when sales of Toledo-made sport utility vehicles first showed signs of a prolonged slowdown. More than 600 workers at the plant accepted buyouts, avoiding all but about 100 layoffs. Since then the Toledo North plant has been shut down more than 14 weeks because of slow sales.

Through the end of September, sales of the Liberty are off 21 percent from last year, while sales of the Nitro are off 46 percent. Wrangler sales have dropped 30 percent.

The automaker will offer buyout packages to employees to voluntarily sever their ties with the firm in exchange for between $70,000 and $100,000 in cash. Similar offers were made this week to Chrysler workers at several plants, including the Toledo Machining facility in Perrysburg Township.

Laid-off employees would be entitled to unemployment and subpay, which provides a supplemental benefit for a limited time that allows a laid-off employee to receive about 95 percent of his or her normal base take-home pay.

The loss to metro Toledo s economy could exacerbate the local economic picture. The city budget alone easily could take a $1 million hit or more in lost income taxes, not including lost supplier jobs.

Some secondary service suppliers to the factory had been told by their employers that Chrysler intended to eliminate its second shift. However, as of early yesterday evening, United Auto Workers Local 12 officials had not been informed of any decision by Chrysler.

Dan Henneman, Jeep Unit Chairman for UAW Local 12, said earlier that if the factory s second shift is eliminated, the job losses would leave a deep impact on the already scarred local economy. He said the cuts will lead to secondary job losses among the dozens of automobile suppliers in the area.

It s going to lead to more foreclosures and more unemployment and make everything worse in Toledo, Mr. Henneman said. He could not be reached for comment last night.

George Mokrzan, senior economist with Huntington National Bank in Columbus, said the cuts will hurt the local economy, which he said was starting to stabilize.

There have definitely been some positive things going on in Ohio s economy recently. Unfortunately now, we re getting some new headwinds from the national economy, Mr. Mokrzan said.

He said falling crude oil prices, which have fallen by more than half since the summer, should help revive at least some sales of Toledo-made SUVs.

But consumers are a little bit nervous about what s going on in the markets and in the job markets, so auto sales are probably going to fall off here in the near term, he said, adding that he is not bearish at all about the Midwest s economy.

Cerberus Capital Management LP, Chrysler s parent firm, reportedly has been in negotiations with General Motors Corp. discussing a possible swap of Chrysler for GM s remaining share in its financing arm, GMAC. No public announcements on a potential deal have been made by the firms yet, however, and privately held Cerberus is believed to be negotiating with other parties to take over Chrysler.

Auto sales in North America have plummeted this year as the industry first fought through record-high gasoline prices and then a credit crisis that made it difficult for many people to finance new-vehicle purchases. Chrysler has suffered the most dramatic drop of any of the three domestic automakers, losing 25 percent of its sales through the first nine months of the year.

Chrysler s fleet of vehicles is heavily weighted with trucks and SUVs, and the automaker has lagged its competitors in its ability to offer small, fuel-efficient vehicles.

But last month, Chrysler surprised the entire industry when it introduced three high-mileage, electric-drive vehicles, including a Jeep Wrangler Unlimited, and promised to manufacture one of the three by 2010.

Contact Larry P. Vellequette at: lvellequette@theblade.com or 419-724-6091.



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