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Article published February 13, 2009

Viability plan sure to affect Jeep workers
Report to feds needed to secure $3B more in loans



Workers at Chrysler LLC's Toledo Jeep Assembly complex must feel as though they've signed up to take life on a "pass/fail" basis.

Their employer must submit a plan by Tuesday on how it intends to stay in business with the help of another big government loan. Meanwhile, at least one prominent analyst is suggesting one of the company's two Jeep plants in Toledo could disappear altogether.


Haig Stoddard, a respected automotive analyst with IHS Global Insight in suburban Detroit, suggested this month that Chrysler could, among other actions to reduce its underutilized production capacity, consolidate its two Jeep assembly plants in Toledo into one.

It was one of several scenarios the analyst said Chrysler might pursue to further shrink its manufacturing footprint, including the elimination of shifts or the shutdown of other plants in its inventory.

Chrysler officials said yesterday that plant closings won't be part of the company's submission to the government in its efforts to secure an additional $3 billion in loans. The automaker has one Toledo plant making Jeep Libertys and Dodge Nitros and another plant, consisting of four factories, making Jeep Wranglers.

"Viability plans" from both Chrysler and General Motors Corp. - the detailed business plans that are to guide the company back to profitability and the repayment of billions in federal loans - must be turned in to the government by Tuesday as a condition for previous and future federal loans each company received.

Speaking to the Chicago Economic Club yesterday, Jim Press, Chrysler's vice chairman and president, said the automaker - along with the industry as a whole - "is being forced to rethink everything."

"The good news," Mr. Press said, "is that this is also the opportunity to fix a lot of things that should have been fixed a long time ago."

Chrysler has reduced its production capacity by 30 percent, or 1.3 million vehicles, and reduced its employment by 32,000, or 36 percent of its 2007 work force, he said.

In 2008, the company cut two of the three shifts at the Liberty and Nitro plant and laid off other employees at its Wrangler factory in Toledo.

"I think we're going to see a lot of announcements [in the next few days] on what's going on with their plan," said David Cole, director of the Center for Automotive Research.

Chrysler and GM, both of which received billions in taxpayer loans in December and are asking for more, "are very serious about what they're doing," he said.

"They're both going after their structural costs of production with a vengeance," he said.

Mr. Cole said the two Jeep plants feasibly could be combined, but doing so would involve tremendous capital investment if the product lineup remained unchanged. The Liberty and Nitro, as unibody vehicles, are assembled in a different fashion than the Wrangler, which is a body-on-frame vehicle.

Meanwhile, Chrysler officials this week have been seeking up to 175 volunteers at Toledo Jeep to take a voluntary three-week layoff beginning Monday, company spokesman Max Gates said.

If they are unsuccessful, those with the least seniority will be laid off on an involuntary basis, Mr. Gates said.

Officials with United Auto Workers Local 12 could not be reached for comment.

LINK:toledoblade.com --
 
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