Stellantis, the parent company of Jeep, has announced that approximately 1,100 workers at the Toledo South plant in Ohio will face layoffs early next year. The decision comes as part of the company's efforts to reduce high inventory levels at dealerships.
The Toledo South plant, known for producing the Jeep Gladiator midsize pickup truck, will transition from two daily shifts to one starting as early as January 5. This move is a response to a nearly 21% decline in sales of the Jeep Gladiator this year, with figures showing a total of 36,519 units sold so far.
Stellantis emphasized that these layoffs are necessary to enhance the company's competitiveness and pave the way for a potential return to previous production levels. The United Auto Workers union, representing employees at the Toledo plant, has been contacted for comment.
Under the union contract, laid-off workers will receive supplemental pay for one year, amounting to 74% of their regular pay when combined with state unemployment benefits. Additionally, health insurance coverage will be provided for two years.
This decision is part of Stellantis' broader strategy to address the issue of high inventory across its U.S. dealer network. The company has been grappling with declining sales and has resorted to discounts to counteract high sticker prices that followed a challenging second quarter.
Earlier in the year, Stellantis had warned of potential layoffs affecting up to 2,450 union workers at its pickup truck plant in Warren, Michigan. However, the actual number of job cuts is expected to be lower due to early retirement offers.
Stellantis has been working to reduce its dealer inventory, which peaked at over 430,000 vehicles in June. Third-quarter sales saw a 20% decline, contributing to a year-to-date decrease of over 17%. In contrast, the broader auto industry experienced a 1% sales increase from January to September.
CEO Carlos Tavares revealed that the company has managed to reduce inventory by 52,000 units in recent months and aims to further decrease it to below 350,000 by Christmas. This effort is part of Stellantis' strategy for a fresh start in the upcoming year.
Stellantis, formed through the merger of PSA Peugeot and Fiat Chrysler Automobiles in 2021, reported a 27% decline in net revenues for the third quarter. The company has been implementing cost-cutting measures, including delaying factory openings, laying off union workers, and offering buyouts to salaried employees.
The United Auto Workers union has expressed discontent over delays in reopening the Belvidere assembly plant in Illinois, with the possibility of a strike looming. Stellantis attributes the delays to a sluggish market environment.
