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Chrysler to Cut 1000 Salaried Jobs - Wall Street Journal

July 23, 2008

By NEAL E. BOUDETTE
July 23, 2008 4:23 p.m.

DETROIT -- Chrysler LLC is planning to cut 1,000 salaried jobs by Sept. 30, in an effort to cut costs amid a deep slump in U.S. auto sales, according to a memo sent to employees.

"To respond to the current market conditions, an incremental manpower reduction of 1,000 salaried employees by September 30, 2008 will be required," Nancy Rae, Chrysler's human-resources director, wrote. A company spokesman confirmed the accuracy of the memo.

The cuts are in addition to previously announced jobs reductions, Ms. Rae said. They will be accomplished "through a combination of natural attrition and retirements, special retirement programs and involuntary separations where necessary," the memo said.

Despite the challenging environment, Chrysler's liquidity position in the first half remained unchanged compared to December "as a result of aggressive programs to reduce working capital, the sale of non-core assets and volume related manufacturing reductions," the memo said.

Nevertheless, Ms. Rae added, "further actions must be taken to improve our business and return to profitability. In response to the continued deterioration in the U.S. automotive market, an incremental reduction in both salaried headcount and supplemental resources is, unfortunately, necessary."

At the end of December, Chrysler had about $9.5 billion in cash and other liquid reserves, people familiar with the matter said.

Last fall, Chrysler cut production in anticipation of a tough year in 2008. In June it announced it would idle indefinitely a minivan plant near St. Louis starting Oct. 31. It will also eliminate one shift of production at an adjacent truck plant. Starting Sept. 2, the St. Louis truck plant will operate one shift a day instead of two.

Write to Neal E. Boudette at neal.boudette@wsj.com¹