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Daimler Chrysler Essay

3781 words - 15 pages

ECONOMICS ISSUES PROJECT ? DAIMLER CHRYSLER INTRODUCTION The big three automakers have all had their ups and downs over the years, when it comes to money and market conditions. None have been harder hit than Daimler Chrysler, during the past several months. Much of their distress is being caused by the slowdown in the U.S. economy, which happens to be one of the largest importers of vehicles from Canada. Almost 90% of Canada?s automotive production is exported to the United States, who, in turn, dictate market trends that dominate the auto industry.Daimler Chrysler is trying desperately to recover from their losses by way of job cuts, plant closures, shift reductions, and decreased production. The first major step they made in the recovery process was firing chief executive officer James Holden, and other senior executives. Dieter Zetsche, who is now in charge of getting Daimler Chrysler back up to profitability, replaced James Holden. The recovery plan, based on realistic assumptions, was released on February 26, 2000 and in it Mr. Zetsche claims that he can be making a profit by the middle of 2002. Mr. Zetsche has until the end of this year to prove his claims.Summarized below are collections of articles discussing Daimler Chrysler?s problems, and what they intend to do to recover from them. Following the summary, these articles will be analyzed in great detail, as to how they relate to what I?ve learned about the ?nature of markets? and ?the role of profit?.SUMMARY OF ARTICLES Article 1: ?Daimler Chrysler Canada to cut 3,000 jobs, part of 26,000 across North America? (National Post Online, January 29, 2001) Chrysler posted a third-quarter loss of $512 million U.S. and believes that the fourth quarter could more than double that, due to the slowdown in the U.S. economy. As part of a plan to get out of the hole, Daimler Chrysler released that they were going to cut 26,000 jobs over the next three years at its Chrysler division in the United States, with 3,000 of those jobs being in Canada. Overall, the cuts amount to about 20% of its North American workforce, caused by closures, idled production, and production cutbacks.Dieter Zetsche, the chief executive of the Chrysler group, said that operations in Canada will be hit relatively hard due to the fact that a high portion of the manufacturing processes are located in Canada. The Canadian Auto Workers union has stepped in to represent the affected employees, working to benefit employees as much as possible. Chrysler expects to offer retirement programs to help alleviate the number of employees who will be laid-off. It is estimated that approximately 23,700 hourly employees and 4,920 salaried workers are eligible for early and regular retirement programs. The company is hoping that 75% of its overall reduction will be met this year through these incentive packages.Daimler Chrysler is expected to close three plants, two in Mexico and one in Argentina. One shift will be eliminated in Brampton and...

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