Daimler will cut 3,500 jobs at its facilities in Portland, Ore., and Ontario, Canada. Citing slumping demand, the automobile and truck manufacturer's cuts come as a result of the company's decision to stop producing its Sterling brand of trucks in March 2009. The plants will be closed permanently with production increasing at facilities in Mexico to take up the slack. Daimler will concentrate on its Freightliner and Western Star lines of trucks instead of Sterling. About 2,300 of the jobs lost will be in the hourly arena with an additional 1,200 administrative jobs added to the total.With the overall truck market depressed, it only makes sense for Daimler to focus on brands that are selling. The overall savings to Daimler will be in the neighborhood of $900 million annually while it will cost the automaker $600 million to make these changes. As the Sterling and Freightliner brands were essentially competitors in the same market segment, one of them was certain to be cut as automotive sales have slumped across the board for the entirety of 2008.
Meanwhile, Chrysler will eliminate a shift at its Toledo North assembly plant in Ohio and speed up the closure of its Newark, Del., assembly plant as a result of the same market conditions that are driving Daimler's cuts. About 825 workers in Toledo will be off the job as of December 31, 2008, with 1,000 jobs being lost in Newark by the end of the year, as well. The Toledo assembly plant currently manufactures the Dodge Nitro and the Jeep Liberty, neither of which have been selling in the slumping market, while the Newark plant manufactures the Dodge Durango and Chrysler Aspen sports utility vehicles that are in low demand. The Newark plant was originally scheduled to end production at the end of 2009.
The automotive market in North America, and especially the U.S., is in terrible shape and is not expected to get better in the near future. With the woes of Wall Street, the last thing consumers are doing right now is rushing out to buy a new vehicle. Things have gotten so bad that Cerberus Capital Management LP (New York), the company that purchased Chrysler from Daimler in 2007, is in negotiations with GM to sell the struggling automotive arm. These negotiations are ongoing, and if they do come to a conclusion, more cuts to both jobs and plants will be necessary in the immediate future.
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