Chrysler Company Wide Summer Vacation

[bjoehandley]

Chrysler plans summer shutdown March 13, 2008 5:20 PM ET

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All Associated Press newsDETROIT (AP) - After losing $1.6 billion in 2007 and watching its U.S. sales plummet in the first two months of this year, Chrysler LLC is taking a drastic new step to right the ship: Requiring all employees worldwide to take a two-week vacation this summer.

Chrysler informed employees of the plan in an e-mail Tuesday that was obtained by The Associated Press. Chrysler spokeswoman Mary Beth Halprin confirmed the e-mail was sent.

"This year, in order to create better alignment and efficiency across organizational lines and boost productivity, Chrysler will use a corporate-wide vacation shutdown for the weeks of July 7 and July 14," the e-mail said. "We ask that you approach this idea with an open mind and a team spirit. It's going to take your cooperation and teamwork to achieve success."

Halprin said the move isn't a cost-saving measure, but an attempt to get more efficient.

"When you have projects going on, if everyone takes vacation at the same time, you don't have that gap in knowledge on the team that you do when you're covering for someone on vacation," she said. "It does help to ensure that projects continue on time."

But David Cole, chairman of the Center for Automotive Research in Ann Arbor, said cost savings were certainly a factor.

"They would not have done this if it had not been, over the longer term, to save costs," Cole said.

North American plants have traditionally shut down for a week or two in the summer as equipment is updated for new vehicle models, Halprin said. But this will be the first time that all employees, hourly and salaried, will be affected.

Halprin said Chrysler employees have an average of four weeks of vacation time, and people will be encouraged to use their paid vacation days. Options will be available to salaried employees who have already used their annual allotment of days, including taking unpaid days off or attending training programs. Hourly employees go on temporary paid layoff during plant shutdowns. She also said some employees will continue to work during the shutdown, such as people who work with dealers.

"If we have a hot product and we need to continue operations, we will do so," she said.

Chrysler has 71,578 employees worldwide, including 15,061 salaried workers and 56,517 hourly workers.

Erich Merkle, vice president of auto industry forecasting for the consulting company IRN Inc. in Grand Rapids, said the announcement is symptomatic of the bumbling approach at Chrysler since it was acquired last August by Cerberus Capital Management LP, a New York-based private equity firm.

"A lot of the stuff they're doing is trial and error," he said. "They're probably finding it's more difficult to bring the cost savings out of Chrysler than they thought originally. It always looks easier from Wall Street."

In a widely circulated letter to investors in January, Cerberus managers seemed to lower expectations for Chrysler's performance.

"We believe we bought the company very cheaply, and we do not need to be heroes to earn a good return on the investment," the letter said.

Merkle also cited Chrysler's recent lawsuit against supplier Plastech Engineered Products Inc., which filed for bankruptcy protection last month. Chrysler wants to take its equipment from Plastech's plants and give it to other suppliers, but it has so far been unsuccessful.

Chrysler would probably save very little money from the vacation plan, Merkle said, but the company has been on a cost-cutting binge since the Cerberus takeover. Chrysler announced in November it will cut up to 11,000 hourly and salaried jobs through 2008 because of reduced demand for its vehicles.

Chrysler's U.S. sales fell 13 percent in the first two months of this year, as customers rejected its truck-heavy lineup in favor of more fuel-efficient cars. Total U.S. sales were down 5 percent, according to Autodata Corp. This is expected to be the slowest year for U.S. auto sales in a decade.

Corporate shutdowns aren't unprecedented in the auto industry. General Motors Corp. shuts down all its U.S. manufacturing facilities for two weeks every summer, which affects all salaried and hourly employees in those plants. Most non-manufacturing salaried U.S. employees also take off the week of July 4, spokesman Tom Wilkinson said, although the shutdown isn't mandatory.

Ford Motor Co. also is planning a two-week shutdown for all its U.S. and Canadian plants in July, affecting both salaried and hourly workers at those plants, spokeswoman Marcey Evans said. Employees in product development research and engineering also are expected to take a weeklong break starting June 30. Those employees were notified of the vacation time periods in October so they could plan accordingly, Evans said.

[peg leg]

Another cheap shot at our beloved Chrysler from a cynical outsider. Guess we'd better just shut the doors and go home. NOT!
Cerberus has a stellar reputation, has no interest in closing a viable investment, and trusts its Chrysler managers to do the industry wide practice of shutting down in summer. Hey, don't they shut down for summer model changeover anyway?
Tell you what, maybe we are the exception here in Utah, but Dodge trucks and Calibers are kicking butt. Jeep is doing very well.
Panic!!