Fiat Chrysler Automobiles NV said Wednesday it will lay off about 1,420 production workers at a Sterling Heights Assembly plant and Sterling Stamping for an indefinite period as demand for the midsize sedan produced there slows.
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The layoffs, FCA’s first significant downsizing since 2009, affect about 41 per cent of the workers at the plant and about three percent of FCA’s United States staff. Sales of the Chrysler 200, whose main customers are car-rental companies, fell more than 60 per cent in the first quarter.
As a result, Fiat Chrysler CEO Sergio Marchionne announced in January that the company would likely be discontinuing production of the Chrysler 200 and Dodge Dart in the near future in order to refocus its efforts on the popular Jeep and Ram models.
“FCA is not the only company experiencing a slow market for small cars”, he said.
That vehicle is expected to hit showrooms later this spring.
“Cutting a shift is always a hard decision, it often proves best in the long run, especially if it allows room at a plant for a more profitable product”, said Rebecca Lindland, another senior analyst with KBB. Fiat Chrysler has reported six years of consecutive monthly sales gains, a trend that helped the company add 11,000 to its Detroit-area head count since 2009.
“While today’s announcement of a shift reduction at Sterling Heights Assembly is unfortunate, it is not unexpected”, UAW Vice President Norwood Jewell said in a statement. The previous year cars outsold SUVs and trucks in the US market was 2012, when 51 percent of new vehicles sold were cars, according to industry consultant Autodata Corp. S and has noted five straight years of record sales.
The indefinitely laid-off employees will be placed in other open full-time positions in Metro Detroit “as they become available”. On Tuesday, the company announced that it will spend $1.6 billion to build a new factory in the region for small cars, which will allow the automaker to make more trucks in US. Fiat Chrysler sold only 7,500 of the cars last month, less than half the number it sold a year ago.
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Coming years could bring further job cuts if FCA succeeds in outsourcing the next-generation 200’s production to another automaker.
