In the private sector things get cut back and people lose jobs.In the public sector we just raise taxes an hire more people.School districts and Towns take notice on what the big boys do.














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STATEMENT ON CHRYSLER OPTIONS


Today the Supervisory Board will reach a decision on the Board of Management's decision to restructure the Chrysler Group. The Board of Management intends to consider other, more far-reaching strategic options with partners in order to support and facilitate the program. No option is being excluded in the interest of arriving at the best possible solution for the Chrysler Group and DaimlerChrysler as a whole. -- DaimlerChrysler


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Dow Jones, Reuters
DaimlerChrysler AG (DCX)
PRICE
CHANGE
67.18
2.73
10:09a.m.



Ford Motor Co. (F)
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8.62
0.17
10:09a.m.



General Motors Corp. (GM)
PRICE
CHANGE
36.65
0.31
10:09a.m.



Toyota Motor Corp. ADS (TM)
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CHANGE
135.99
1.13
10:09a.m.



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Chrysler to Cut 13,000 Jobs
In Push to Regain Profitability
Parent Company Posts Quarterly Profit,
While U.S. Unit Reports $162 Million Loss
By JOHN D. STOLL and TERRY KOSDROSKY
February 14, 2007 10:28 a.m.

AUBURN HILLS, Mich. -- Chrysler Group on Wednesday said it will cut 13,000 jobs, close a major assembly plant and reduce shifts at three other plants as part of a restructuring effort designed to restore profitability at the auto maker by 2008.

Its German parent, DaimlerChrysler AG, also said it is looking into further strategic options with partners and that it doesn't exclude any option as it seeks the best solutions for its U.S. unit.

MORE ON CHRYSLER


• Page One: In Humbling Overhaul, Chrysler Faces Big Cuts
02/14/07

• Chrysler's Road Is Paved With Distractions
2/6/07

• DaimlerChrysler to Pull U.S. Arm Closer
2/6/07

• Page One: Chrysler Turnaround Falters
9/20/06

• Page One: Ford and Chrysler Darken Their Outlooks
9/16/06

Shares of DaimlerChrysler traded on the New York Stock Exchange were up 4.3%, or $2.79, at $67.01 in early trading. The stock hit its highest level since mid-2002 earlier in Frankfurt trading after DaimlerChrysler -- which has been under pressure from some shareholders to sell the loss-plagued Chrysler unit -- said its board would consider all options.

Chrysler, fresh off a $1.5 billion loss in 2006, as expected announced that it will close its sport-utility-vehicle assembly plant in Newark, Del., as part of an effort to trim 11,000 blue-collar jobs over the next three years and reduce its annual production capacity by 400,000 vehicles. At the same time, the auto maker will shed 2,000 white-collar jobs by 2008, bringing Chrysler's work force reduction under the restructuring to about 16% of the total.

The announcement follows a severe downturn in North America in 2006 that left the company with bloated inventories and a need to increase sales incentives while cutting production of trucks and SUVs, which had been a mainstay of profits for Chrysler. The situation, which mirrors struggles at Ford Motor Co. and General Motors Corp., demonstrated Chrysler's need to downsize its business in its core market.

"The key to our long-term success will be our ability to transform the organization into a different company to achieve and sustain long-term profitability," Chrysler Chief Executive Tom LaSorda said in a statement.

Chrysler Weighs Down Results

DaimlerChrysler said earlier Wednesday that its fourth-quarter net profit fell 40% from a year ago, dragged down by the weak performance at the Chrysler unit. Chrysler swung to an operating loss in the latest quarter of €124 million ($161.6 million), from a profit of €428 million a year earlier. For the full year, however, DaimlerChrysler's operating profit came in at €5.52 billion ($7.17 billion), slightly above the guidance previously provided by the auto maker, thanks to the solid performance at the Mercedes Car Group.

Not long ago, Chrysler appeared to distance itself from the troubles plaguing U.S. rivals GM and Ford. Its market share increased in 2005 and it turned a profit that year. But Chrysler fell victim to a sharp decline in sales of pickup trucks and SUVs in 2006 amid consumer concerns about fuel prices and a slowdown in the housing market. Pickups, SUVs and minivans made up about 70% of Chrysler's lineup.

The auto maker didn't cut production fast enough and unsold cars piled up. Chrysler also built vehicles without dealer orders, and it has taken several months to whittle down that bank.

The restructuring plan is deeper in some areas than expected, said Argus Research auto analyst Kevin Tynan. He added, however, that it's merely more of the same from U.S. auto makers. Mr. Tynan said that until U.S. auto makers address their high cost structure, it will be hard to compete with companies such as Toyota Motor Corp. that have been steadily gaining market share in the U.S.

"At the headline, it's probably more aggressive than what was expected, but there's a lot of inputs that have to break your way," he said. "And when you don't have the cost structure to make it happen, I don't know if it's enough."

He said winning the race in a hyper-competitive market like the U.S. comes down to having the lowest cost structure, and the U.S. auto makers don't have it.

Primary Focus on Costs

DaimlerChrysler is trying to end the boom and bust profit cycle typical of Chrysler even before the 1998 merger that created the German-U.S. company. So far, Chrysler has failed to deliver a consistent stream of profits. The restructuring announced Wednesday is the second major effort to overhaul the Chrysler business this decade.

Chrysler said Wednesday that its primary focus in the reorganization is costs. The company aims to cut as much as $1.5 billion in material costs by 2009. Chrysler said that the plan is structured so that the company can deal with unforeseen headwinds. The auto maker expects that it will result in $4.5 billion in financial improvements, or a return on sales of 2.5% by 2009.

CHRYSLER'S COST CUTS


Capacity & Efficiency
Reduce total production capacity by 400,000 units per year. In 2007, eliminate a shift at Newark (Delaware) Assembly Plant and the Warren, Mich., Truck Plant. In 2008, eliminate a shift at St. Louis South Assembly Plant. Idle Newark Assembly Plant in 2009. Idle the Cleveland Parts Distribution Center in December 2007. Adjust powertrain, stamping and component operations to reflect reduced capacity.
Employee Reduction
Overall, Chrysler Group will reduce the number of employees by 13,000, or approximately 16%. Hourly employment will be reduced by 11,000 over three years, with 9,000 in the U.S. and 2,000 in Canada (4,700 in the U.S. and 1,100 in Canada in 2007 alone). Of the U.S. hourly total, 4,000 employees will be impacted by assembly plant actions; 1,000 by reduced capacity in powertrain, stamping and other component operations; 1,000 by other actions including the potential sale of support functions; and 3,000 through technology, efficiency and productivity. Salaried employment will be reduced by 2,000 over the next two years, with 1,000 each in 2007 and 2008. Special retirement programs and other termination and attrition programs will be announced separately.
Source: CompanyThe company said that it expects to take restructuring charges of up to €1 billion in 2007. It also said that it sees its loss from ongoing operations this year coming in less than last year's figure.

In addition to closing the Delaware plant by 2009, Chrysler will eliminate a shift at the plant this year. The company will also eliminate a shift at its Warren, Mich., truck plant in 2007 and will eliminate a shift at its St. Louis South Assembly plant next year. Chrysler is also planning to idle its Cleveland parts-distribution center in 2009.

The company said it will explore the sale of support operations, including transportation services, while working to reduce and optimize its dealer network to improve dealer profitability. The company also emphasized that it will continue its product offensive, with eight new and five refreshed products in 2007. Chrysler also said it will make better use of the alliances and partnerships it already has around the world.

Many industry observers, however, will be focused on what kinds of options DaimlerChrysler could pursue beyond those announced Wednesday.

John Casesa, managing partner at New York-based Casesa Strategic Advisors, said the board's statement on considering all options represents a "dramatic change in tone" from DaimlerChrysler regarding the future of the Chrysler Group.

"A decision on Chrysler's future is tantamount to a decision on DaimlerChrysler's future," said Mr. Casesa. "They have a choice, either full integration with Mercedes to achieve the full benefits of the merger or complete separation."

Last year, DaimlerChrysler denied any intention to sell Chrysler after an executive sidestepped questions on that matter during a conference call.

Officials from DaimlerChrysler and Chrysler are speaking this morning at a press conference in Michigan and later will hold a conference call with analysts.