Model-Mix Shifts

Chrysler Group's restructuring plan will shift the auto maker's model mix by 15% to a 60:40 truck-car split, which better reflects consumer preferences, executives say.

In 2006, a 75:25 ratio and hostile market conditions contributed to a full-year loss of $1.4 billion, the auto maker acknowledges while releasing details of its long-awaited “Recovery and Transformation Plan.”

The action calls for 13,000 job cuts — 11,000 hourly, 2,000 salaried — and a capacity decrease of 400,000 units annually through shift reductions at three light-truck plants in St. Louis; Warren, MI; and Newark, DE. St. Louis builds minivans, Warren produces pickups and Newark assembles fullsize SUVs.

Newark also will be mothballed in 2009.

In addition, the auto maker will idle a parts distribution center in Cleveland and explore the sale or outsourcing of non-core operations such as transportation.

The United Auto Workers union, from whose ranks will come 9,000 job losses, calls the announcement “devastating,” but vows to “work to ensure that as the Chrysler Group returns to profitability, our members have opportunities to return to work.”

After announcing the cuts, CEO Tom LaSorda says the auto maker is embarking on a $3 billion powertrain offensive to offer more fuel-efficient engines, transmissions and axles that “will give us a portfolio that is more fuel efficient and more globally diverse.”

Long-rumored to be in the works, the project is dubbed “Phoenix,” and is designed to replace the auto maker's current four 6-cyl. engine families with one modular engine family.

LaSorda says the effort will fold in technology used to develop the 4-cyl. World Engine built at the Global Engineering Mfg. Alliance plant in Dundee, MI.