Given their managerial conservatism, automotive firms are trying to maximize their current resources and still achieve decent profit margins. None of these cutbacks were announced nor have the intrepid Wall Street analysts picked up on these recent internal dealings. How a company acts towards its employees, stockholders, suppliers, and customers during a downturn can tell you a lot about a company. Laid-off employees were asked to sign agreements guaranteeing them two additional weeks of pay in exchange for a signed agreement not to sue the company for any reason. The massive layoffs and budget freezes will prove out to be unwarranted and overkill.
Conservative action is needed during economic slow-downs but wholesale shutdown can be deadly.
Stiff competition, that's what. With Ford and GM fighting a brutal incentive war and innovative products rolling off Japanese-owned assembly lines in Indiana, Ohio, Kentucky, and Canada, DCX was caught in the crossfire. Having to participate in a game they were ill-equipped to play, DCX tried keeping pace with Ford and GM in the incentive arena. This drained DCX's vaunted cash reserves, and led to the massive restructuring we are currently witnessing. Market conditions and lukewarm products had more to do with it than anything else.