Chrysler says to cut costs by 1 bln usd in 2003; health care, parts targeted
AUBURN HILLS, Michigan (AFX) - The Chrysler Group has confirmed it is taking steps to cut costs by 1.0 bln usd this year, two weeks after its parent company issued a profit warning for the group.
Cost-cutting measures, Chrysler said in a statement, include trimming its payroll by 2.0 pct, cutting health care benefits for white-collar workers and retirees, and further shaving its parts bill.
The auto maker stressed that the reductions in its managerial ranks will come through attrition. The remaining salaried workers will have to make increased contributions to their health care plans in the form of higher prescription drugs costs and deductibles from July 1.
The changes to the company's health care policy will affect 17,000 employees and 18,000 retirees and will bring Chrysler in line with rivals General Motors Corp and Ford Motor Co, Chrysler spokeswoman Debra Nelson said.
The auto maker, in the third year of its turnaround plan, has also written to 132 of its 850 suppliers urging them to make their prices more competitive or risk losing the Chrysler Group as a customer.
The company blamed the tough competitive environment in the US auto market -- where generous incentives are taking a toll on auto makers' bottom lines -- and rising health-care costs for the latest round of cuts.
Earlier this month, DaimlerChrysler AG said its Chrysler unit would post a second-quarter operating loss of around 1 bln eur and miss its full-year target.
The Chrysler Group is still expected to report a positive operating profit before charges for 2003.
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AUBURN HILLS, Michigan (AFX) - The Chrysler Group has confirmed it is taking steps to cut costs by 1.0 bln usd this year, two weeks after its parent company issued a profit warning for the group.
Cost-cutting measures, Chrysler said in a statement, include trimming its payroll by 2.0 pct, cutting health care benefits for white-collar workers and retirees, and further shaving its parts bill.
The auto maker stressed that the reductions in its managerial ranks will come through attrition. The remaining salaried workers will have to make increased contributions to their health care plans in the form of higher prescription drugs costs and deductibles from July 1.
The changes to the company's health care policy will affect 17,000 employees and 18,000 retirees and will bring Chrysler in line with rivals General Motors Corp and Ford Motor Co, Chrysler spokeswoman Debra Nelson said.
The auto maker, in the third year of its turnaround plan, has also written to 132 of its 850 suppliers urging them to make their prices more competitive or risk losing the Chrysler Group as a customer.
The company blamed the tough competitive environment in the US auto market -- where generous incentives are taking a toll on auto makers' bottom lines -- and rising health-care costs for the latest round of cuts.
Earlier this month, DaimlerChrysler AG said its Chrysler unit would post a second-quarter operating loss of around 1 bln eur and miss its full-year target.
The Chrysler Group is still expected to report a positive operating profit before charges for 2003.
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