Chrysler axes 5,000 jobs as merger talks with GM continue
Chrysler has cut 5,000 white collar jobs as it battles with the severe downturn in the US auto industry and struggles to agree a merger with General Motors.
By James Quinn, Wall Street Correspondent
Last Updated: 8:30PM BST 24 Oct 2008
The failure of the two sides to find investors willing to bank-roll a merger has forced Chrysler to cut its costs, axeing around 25pc of its office-based employees. The redundancies come on top of 1,000 redundancies announced at the end of September.
Chief executive Bob Nardelli blamed the cuts on the state of the automotive industry: "These are truly extraordinary times for our industry. Never before have auto industry sales contracted at such a fast rate.
“Throughout this challenging time for our industry and our company, we have continued to face the realities of our business environment, and working as a team, we have been right-sizing our organization to become as competitive as possible,” he said.
The bulk of those departing will leave the company payroll as of December 31, with those affected learning of their fate from today through to November 5.
Meanwhile shares in General Motors continued to fall as concerns resurfaced about the company’s liquidity.
The manufacturer’s shares slumped by as much as 14.8pc at one stage.
The fall in GM’s shares came despite reports that it and Cerberus, the private equity firm which controls Chrysler, have stepped up talks aimed at merging the two companies together.
Cerberus is believed to be considering trying to breathe some new life into the combined company – if a deal takes place – by looking for some new blood to help to run the company.
Although GM chief executive Rick Wagoner is still the most likely contender to run the merged entity, the private equity house is reported to want to breathe “fresh air” into management hierarchy.
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Chrysler has cut 5,000 white collar jobs as it battles with the severe downturn in the US auto industry and struggles to agree a merger with General Motors.
By James Quinn, Wall Street Correspondent
Last Updated: 8:30PM BST 24 Oct 2008
The failure of the two sides to find investors willing to bank-roll a merger has forced Chrysler to cut its costs, axeing around 25pc of its office-based employees. The redundancies come on top of 1,000 redundancies announced at the end of September.
Chief executive Bob Nardelli blamed the cuts on the state of the automotive industry: "These are truly extraordinary times for our industry. Never before have auto industry sales contracted at such a fast rate.
“Throughout this challenging time for our industry and our company, we have continued to face the realities of our business environment, and working as a team, we have been right-sizing our organization to become as competitive as possible,” he said.
The bulk of those departing will leave the company payroll as of December 31, with those affected learning of their fate from today through to November 5.
Meanwhile shares in General Motors continued to fall as concerns resurfaced about the company’s liquidity.
The manufacturer’s shares slumped by as much as 14.8pc at one stage.
The fall in GM’s shares came despite reports that it and Cerberus, the private equity firm which controls Chrysler, have stepped up talks aimed at merging the two companies together.
Cerberus is believed to be considering trying to breathe some new life into the combined company – if a deal takes place – by looking for some new blood to help to run the company.
Although GM chief executive Rick Wagoner is still the most likely contender to run the merged entity, the private equity house is reported to want to breathe “fresh air” into management hierarchy.
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