Going Separate Ways?
February 14, 2007
DaimlerChrysler is putting the future of its subsidiary Chrysler to the test. The company said it was considering a sale, but also examining strategic options with partners to restructure its US business.
An immediate step presented at the company's earning conference Wednesday was to close one Chrysler plant in the US, resulting in some13,000 job cuts from 2007 to 2009, the company announced Wednesday. When the layoffs are complete, the Chrysler group will be nearly half the size it was at its peak when it was purchased by Daimler Benz in 1999.
The auto giant's Frankfurt office released a statement saying the job cuts were part of a three-year Chrysler "recovery and transformation plan that seeks a return to profitability by 2008."
DaimlerChrysler up, Chrysler down
DaimlerChrysler's operating profit in 2006 rose to 5.5 billion euros ($7.2 billion) from 5.2 billion euros the previous year. However, the company's troubled Chrysler division suffered a loss of 1.1 billion euros.
"We are not ruling out any option in order to find the best solution for the Chrysler Group and DaimlerChrysler," the company said in an ad hoc announcement. "The board of management intends to consider other, more far-reaching strategic options with partners in order to support and facilitate the program."
It could be a bitter end -- ironically on St. Valentine's Day -- for a tie-up that was originally hailed as a marriage made in heaven nearly nine years ago. In fact, the love affair between German group Daimler, with its up-brand Mercedes-Benz market on the one hand, and US car maker Chrysler on the other soured fairly early on.
Already six years ago, DaimlerChrysler's chief executive Dieter Zetsche, then head of Chrysler, prescribed a massive reorganization of the US subsidiary, including the closure of six plants and the loss of 26,000 jobs.
The announcement confirms reports in German media that Zetsche was considering a whole or partial sale of the troubled Chrysler unit. Quoting sources on the supervisory board, the business daily Handelsblatt said Zetsche had instructed an investment bank to sound out all possibilities.
Last-ditch restructuring plan expected for Chrysler
This week's meeting marked the first time DaimlerChrysler held its annual earnings conference at its US headquarters instead of the traditional Stuttgart venue in southwest Germany.
Like the other two of the so-called "Big Three" US auto makers, Ford and General Motors, Chrysler has been sideswiped by cut-throat competition from Asian automobile manufacturers in its home market.
Chrysler's product range, tilted heavily towards pick-up trucks and four-wheel drives, has been overtaken by US consumers' increasing desire for smaller, more fuel-efficient cars.