Massive restructuring at DaimlerChrysler
By After watching the group | 22 Feb 2001
After watching the group's bottomline plunge since its formation, Jürgen Schrempp, head of the German-American automotive combine, DaimlerChrysler, is all set to launch a sweeping restructuring programme that is touted as a first in the automobile industry. The programme is all set to widen the divide between the American and German arms of the automobile major.
Despite criticism from several large US shareholders holding Mr Schrempp responsible for the current mess, the supervisory board of DaimlerChrysler is likely to approve of his plan. It is understood that the plan involves radical cost-cutting at Chrysler and Mitsubishi Motors (MMC), the group's US and Japanese arms, a near $2.7 billion restructuring charge and a management shake-up.
Chrysler, once the most profitable of America's big three automobile companies, has been hurtling downhill in the past few years. From making huge profits two years ago, the company is likely to make losses estimated at $1 billion this year and is not likely to break even till 2002. The planned revamp will see Mr Schrempp take personal charge of a new 'executive committee' that will oversee the group's Mercedez Benz and Chrysler divisions, besides the alliance with Mitsubishi Motors. The overhaul is likely to wipe out nearly 26,000 jobs and see six Chrysler plants closed down.