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"It is really about getting the company ready to take the next step" -- Robert Pittman, co-COO of AOL Time Warner, speaking to The New York Times about the company's announcement of layoffsEdited by Sheridan PrassoReturn to top

Boeing Jettisons a Plant

An executive at Boeing Co. has told BusinessWeek that the company will shut down its massive 737 and 757 assembly lines on the southern outskirts of Seattle and combine them with the existing 747 widebody plant to the north, in Everett, Wash. The dramatic move could save Boeing $1 billion a year and make it the leaner machine it needs to be to surpass Europe's subsidized Airbus Industrie.

In addition, Boeing plans to outsource more components, cut a number of suppliers, and sell off real estate in 27 states. And, for the first time ever, Boeing will farm out wing manufacturing for its new 747X, to Mitsubishi Heavy Industries of Japan. A Boeing spokesman declined to confirm the cost cuts but said: "We continue to be in a tight, competitive environment. We have to continue to keep reducing costs." The goal is to transform Boeing into a company focused on design, marketing, and assembly, while letting others build the parts.

The 8,000 employees at the shuttered plant in Renton will be offered jobs in Everett. But Boeing is counting on attrition to trim the body count. And it can anticipate trouble with unions, including legal action.

Now isn't the time for a labor battle. Airbus is lightspeed ahead in new models and technology. The European consortium has 60 orders for its A380 superjumbo, while Boeing's new version of the 747 has yet to book its first order. With commercial jet deliveries expected to flatten over the next two years, Boeing can't afford to wait to become a new kind of aircraft company.By Stanley Holmes; Edited by Sheridan PrassoReturn to top

As Suppliers Balk, Chrysler Blinks

The first step of DaimlerChrysler's U.S. turnaround strategy has hit a rough patch. Faced with a revolt among parts suppliers being pressed for 5% price cuts, Chrysler Group CEO Deiter Zetsche was forced to back down and renegotiate how much he'll pay for parts.

Industry sources say at least four auto-parts suppliers decided to call back their delivery trucks after shipping engine and electronics components to Chrysler factories earlier this month. And 70 out of Chrysler's top 100 suppliers have refused flat-out to accept Zetsche's demands. Even so, the company has avoided production stoppages, and Zetsche insists many suppliers are cooperating.

The problem is now dire enough that Chrysler is circulating an internal report to managers warning of companies that might stop shipping parts. Officially, Chrysler says that it is sticking by its savings target, which would generate $2 billion in price cuts. With a $512 million loss in the third quarter and $1.3 billion in red ink expected from the fourth, the company needs those savings now. However, with so many suppliers fighting back, it's going to be a tough battle.By Jeff Green; Edited by Sheridan PrassoReturn to top

Baby Lincoln: A Gleam in Ford's Eye

Ford Motor's luxury division, Lincoln, is the latest auto maker with BMW envy. Stodgy ol' Lincoln, known for selling Town Cars to sixtysomethings in Florida, plans to launch a smaller, hipper car by 2004. The model will compete with BMW's hot-selling entry-level 3-series, the so-called Baby Beemers.

A Baby Lincoln? Seems so. The new car, along with the current Lincoln LS midsize sedan, are further attempts by Lincoln to reach younger buyers, according to industry sources. James Hall, vice-president of AutoPacific Inc., forecasts sales of about 20,000 cars, and says the model could be sold in Europe as well. James Rogers, general marketing manager at Lincoln, will only say: "Our intention is to have a full product line."

Lincoln will have plenty of competition. Audi's all-new A4, which goes on sale this fall, is designed to match the 3-series' sporty driving performance and its price of just over $30,000. And Ford's British Jaguar unit will target 3-series buyers this fall with a $35,000 small sedan. Also, General Motors' Cadillac Div. plans to launch its Catera midsize model this year.

No wonder carmakers are setting their sights on BMW: Sales of the 3-series rose 16%, to 90,000 cars, last year, propelling BMW's overall sales to nearly catch up to Lincoln's. Time for Lincoln to step on it.By David Welch; Edited by Sheridan PrassoReturn to top

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