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Chrysler to Take Two-Week Break
Wall Street Journal
March 13, 2008 2:15 p.m.

DETROIT -- Chrysler LLC plans to shut down the entire company for two weeks this summer as a cost saving move to "accelerate Chrysler's recovery and transformation," Chief Executive Robert Nardelli told employees in a memo distributed Thursday.

Mr. Nardelli told employees they will have to take vacation for the weeks of July 7 and July 14 "in order to create better alignment and efficiency across organizational lines and boost productivity," according to the memo, which was reviewed by The Wall Street Journal. (See memo.)

Chrysler, General Motors Corp. and Ford Motor Co. usually shut down only their auto and component plants for at least two weeks each summer. GM has been conducting company-wide shut downs over the past few years as it has struggled to stem massive losses.

This year Chrysler will shut down its plants as well as most other departments in the company. Employees in certain departments such as maintenance or those in charge of getting parts to dealerships as part of the day-to-day business operation will continue to work.

"While some operations will need to work during the shutdown to support business-critical activities and others may need to maintain minimal support staffs in place, most organizations should use this two-week time period to schedule employee vacations," Mr. Nardelli wrote in the memo, which was distributed by email.

Spokeswoman Mary Beth Halprin confirmed the contents of the email.

Chrysler has been scrambling to slash costs as part of a drive by Mr. Nardelli to conserve cash while he restructures the company. Last week the company made plans to permanently close its design studio in California.

Mr. Nardelli was brought in last August when private-equity firm Cerberus Capital Management LP acquired the auto maker from DaimlerChrysler AG, now known as Daimler AG.

The mandatory vacation shutdown comes amid declining vehicle sales in the U.S. and increasing indications the U.S. economy is entering or is already in a recession. Auto sales are expected to fall to about 15.5 million vehicles this year, the lowest level in a decade and about a million fewer than were sold in 2005.

As part of the Chrysler's two-week corporate break, employees will use vacation time already allotted. "It's much more efficient to have a company-wide shutdown," Ms. Halprin said. "The decision is focusing on aligning on all the employees to take vacation at the same time so it is more efficient to have an orderly shutdown and then an orderly reopening of the company."
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