Chrysler, the number three US automaker, has decided to cut around 10,000 production jobs and make other labor force reductions in order to cope with a smaller automobiles market in North America.

Under its new plan, the company would also slash 1,000 white-collar jobs more, and lessen the use of outside contract employees by 37%. It will also make some reduction in overtime limit for all workers.

The cuts come over a diminution declared in February of 13,000 jobs comprising 11,000 production workers, which is around 16% of its entire work force.

The company also said that all these steps were taken to deal with reductions in industry wide volumes and slower sales that necessitate plant adjustments.

The company is ready to block production of four Chrysler models, and adding up two new vehicles and two new hybrid autos to its array.

Dave Elshoff, company’s representative said that after completion of two rounds of cuts, the total employee structure will be around 59,000.

The plans mark a new reformation under Chrysler LLC’s new proprietors led by Cerberus Capital Management that purchased the US automaker from Germany’s DaimlerChrysler in August.

The declaration comes a few days after a landmark contract with the United Auto Workers union got approval by a very narrow margin abiding by rank objection over deficiency of job security guarantees.

Bob Nardelli, Chrysler's chairman and chief executive, said, “The market situation has changed dramatically in the eight months.”

“Annual industry volume (US market) then was running at a 17.2 million clip. Now, we expect a seasonally adjusted annual volume for 2007 to be significantly lower and carry over into 2008,” he added.

Tom LaSorda, vice chairman and president told, “We have to move now to adjust the way our company looks and acts to reflect a smaller market. That means a cost base that is right-sized and an appropriate level of plant utilization.”

As part of the streamlining, Chrysler will also be making reductions in shift timings at various US and Canadian plants. The company also said that it remains confided to its promise to the UAW to spend over $15 billion on facilities, new products and technology during the life span of the newest deal through 2011.

Chrysler also declared elimination of its four models through 2008. The four models include the Dodge Magnum sedan, the convertible version of the Chrysler PT Cruiser, as well as the Chrysler Pacifica crossover and its Chrysler Crossfire roadster.

The company will also add up two all-new products to its product line including the Dodge Journey and Dodge Challenger, together with two new hybrid models, the Chrysler Aspen and Dodge Durango.

Jim Press, vice chairman and president said, “These actions reflect our new customer-driven philosophy and allow us to focus our resources on new, more profitable and appealing products. Further, these product actions are all in response to dealer requests.”