Incoming Chrysler chief sees no end to cost cuts


DETROIT, (Reuters) - The incoming head of DaimlerChrysler's Chrysler division said Wednesday that he sees no end to cost cutting -- including more possible job cuts -- to offset poor profit margins and increased spending on everything from raw materials to health care.

Tom LaSorda, the 51-year-old Canadian named to take over as Chrysler's chief executive late last month, already casts a long shadow over the company.

He joined Chrysler in 2000 from General Motors Corp. and was instrumental in pushing through a painful turnaround plan, which included the closing of six factories and 26,000 job cuts in North America to help return the money-losing division of the world fifth-largest automaker to profits.

LaSorda, who calls his leadership style tough, said the turnaround required "major surgery" at the Chrysler unit.

In his first major news conference since he was named to succeed current Chrysler boss Dieter Zetsche -- who takes the helm at DaimlerChrysler in Stuttgart next January -- LaSorda signaled that the surgery may still be a work-in-progress.

"I don't think we're ever going to be done on the cost side," LaSorda told reporters.

He cited rising North American health-care costs, and increasing prices for oil- and rubber-based products such as urethanes, along with "net negative pricing" for some vehicles, as among the latest drivers behind what he sees as a never ending attack on costs at Chrysler.

"If we don't have the profits we don't reinvest. So it's a very vicious circle," LaSorda said.

Asked specifically about the possibility of more work force reductions in North America, LaSorda said there was no "widespread" goal. But he stressed that nothing was certain at a time when Detroit's troubled automakers face many challenges.

"We cannot predict what's going on in the marketplace," he said.

"No one, no economist in this country or probably around the world, ever forecast the fuel prices or oil at this level. So guess what? We have to be prepared."

In his wide-ranging comments, LaSorda also said Chrysler may extend through next month a popular consumer incentives program under which it is selling vehicles to the general public at the same low prices a Chrysler employee would pay.

Under Zetsche, Chrysler has sought to distance itself from its cross-town rivals. General Motors Corp. and Ford Motor Co. are both struggling to stem deep losses in their North American automotive operations while Chrysler has been more successful lately, and more profitable than the deep-pocketed Mercedes-Benz side of Daimler.

Chrysler is very much a part of the U.S. auto industry's profit-eroding incentives war, however. And it rolled out its employee pricing for everyone program after GM introduced one in June and Ford followed in July.

LaSorda said no final decision on continuing the program was likely until early September.



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