Chrysler To Cut 2% Of Labor Force

Faced with second quarter losses of $1.1 billion, the Chrysler Group of DaimlerChrysler AG said it will reduce its salaried work force by 2 percent this year.

The cuts will come through attrition, not layoffs, spokesman David Barnas said Tuesday. Barnas declined to specify how many jobs were being eliminated, but did say the Chrysler Group had 17,978 white-collar employees at the end of the first quarter. Two percent of that would be about 360 jobs.

The move comes as Chrysler this year works to cut $1 billion in costs.

It already has deferred merit pay raises, reduced benefits for white collar workers and retirees and trimmed 26,000 jobs.

Earlier, Dieter Zetsche, Chrysler's president, said the automaker had no plans to implement more of those types of cuts. Instead, Chrysler will focus on $1 billion in cost cuts at plants or in purchasing costs.

Chrysler also recently sent a letter to 132 of 850 suppliers urging them to match the lowest possible price worldwide for specific parts or "risk losing future business," Barnas told The Detroit News for a story Tuesday.

He said the letter was not tied to the company's financial difficulties, calling it instead part of the efforts to reduce the $25 billion spent per year on production parts.

"We need to get the prices down — to get them more in line with world-class prices," he said, adding that those who received the letters were the ones whose prices were far out of line with the lowest available prices.

Chrysler's struggles have been building for the year, as its new car and truck sales have slipped 6 percent. But the problems really came to a head in late May when it felt it had to match an incentive push by General Motors Corp.

Previously, Chrysler had projected earnings of $2 billion for 2003. It blames the sudden fall on deteriorating market conditions such as slowing sales and higher-than-expected discounts on new vehicles. Wall Street analysts are skeptical Chrysler can post a profit in 2003.