DaimlerChyrsler has this afternoon confirmed it is to layoff 20% of its workforce - 26,000 workers - during the next three years as a result of "brutal" competition in a shrinking global car market.
Manufacturing plants in Argentina and Mexico will close, while a number in America and Canada will operate with reduced shifts and output. These changes will be made in the next two years as part of a drive to turnaround the ailing company.
At a press briefing at DaimlerChrysler's Michigan headquarters president and CEO Dieter Zetsche said: "Our markets are shrinking and the competition is brutal. Adding to this is that our large fixed and variable costs are growing rapidly. The consequence is a worsening of performance at operating profit level."
There was no mention of claims made in the German and US press today that some production would shift to Mitsubishi, which DC has a 34% stake in.
Mr Zetsche said: "Only by adapting our overall cost structure, workforce and production levels to the realities of the market, while maintaining our investments in exciting products can we establish a sound basis to ensure the long-term health of the Chrysler Group for its numerous stakeholders and be in a strong position for future growth."
In December DaimlerChrysler issued a profit warning on its Chrysler division saying that profit for Year 2000 was likely to be £304.8m compared to a £3.15billion gain in 1999. Full details of DaimlerChrysler's turnaround plan are to be announced at the company's annual press conference on February 26.