Stellantis Reduces Production: Massive Layoff to Happen in Two US Sites

Dec 08, 2023 09:30 PM EST

RED JEEP IN THE MIDDLE OF A DIRT ROAD — (Photo : PEXELS/Brett Sayles )

In a strategic move driven by cost-saving imperatives, Stellantis, a prominent player in the automotive industry has unveiled plans to implement substantial workforce reductions at two of its Jeep manufacturing facilities situated in the United States.

Moving Factors

This initiative encompasses a temporary scaling down of operations at the Mack Avenue plant located in Detroit. Jeep Grand Cherokee SUVs with two or three rows of seats, as well as cutting-edge hybrid types, are made at this plant. In addition, fewer people will be working at the Toledo plant, which is a key part of making the Wrangler SUV and the famous Jeep Gladiator pickup truck.

Stellantis points to the stringent California emission regulations as a significant factor contributing to its decision to curtail Jeep production. Due to this possible drop in demand, mostly in California and other states with similar emission rules, the automaker thinks that sales will suffer, especially for gas-powered vehicles. Seeking Alpha reported about this latest happening.

In a report by 13 abc, Toledo Jeep Assembly Complex workers recently returned to their jobs following the UAW strike's resolution, but now they face a new and unsettling situation. Stellantis, the parent company of Jeep, has issued a WARN notice to UAW Local 12 leadership, revealing plans for significant workforce reductions.

In response to these challenging circumstances, Stellantis has taken a proactive stance by filing a petition contesting these regulations, asserting that they unfairly prejudice the interests of the company. Additionally, Stellantis faces the headwinds of declining sales within its Jeep brand.

Moreover, Seeking Alpha's report shared, part of the reason for this drop is higher interest rates, which make high-end SUVs like Jeep harder for people to afford. The third quarter witnessed a 4% dip in Jeep sales, marking the ninth consecutive quarterly descent, with a year-on-year decrease of 9% through September.

With looming changes on the horizon, the Detroit and Toledo assembly plants, which collectively employ more than 10,000 workers, are poised to initiate layoffs as early as February 5th. Stellantis has already initiated the necessary legal procedures, adhering to the Worker Adjustment and Retraining Notification Act, which stipulates a mandatory 60-day advance notice for impending mass layoffs.

The Impact

According to Fox Business, Stellantis has issued a media release stating that it will adjust production strategies at its Detroit Assembly Complex - Mack in Michigan and Toledo Assembly Complex in Ohio. This decision is partly driven by the necessity to manage vehicle sales in compliance with California emissions regulations, which vary from state to state.

Specifically, the Mack plant will temporarily shift from three shifts to two, while the Toledo facility will transition from its current alternative work schedule to a two-shift arrangement agreed upon during Stellantis' recent contract negotiations with the United Auto Workers (UAW) union.

According to reports, Stellantis faces stricter greenhouse gas emissions standards in California due to CARB's agreements with Ford, BMW, Honda, and Volkswagen. Legal representatives for Stellantis have expressed concerns that the enforcement actions taken against the company could result in significant economic hardships, particularly in terms of the allocation of vehicles to dealers.Effect on Employees

These layoffs are expected to impact approximately 1,225 employees at the Jeep Assembly Complex, with the potential start date as early as February 5 and the possibility of lasting until February 19. Stellantis has indicated that this workforce reduction could affect 131 production operators and team members, along with 1,094 supplemental employees.