Stellantis cuts second shift at Jeep Cherokee plant

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Stellantis NV is cutting nearly 1,700 jobs at its Jeep Cherokee plant in Illinois, the transatlantic automaker said on Friday, the latest example of how the global semiconductor shortage is affecting the industry.

The automaker is cutting shifts at the Belvidere assembly plant from two to one by July 26. The move, which aims to “balance sales and production,” will indefinitely lay off 1,641 employees who make the compact crossover, Stellantis spokeswoman Jodi Tinson said in a statement. semiconductors has “made matters worse”.

“The Company will do its utmost to place hourly laid-off employees into open full-time positions as they become available based on seniority,” added Mr. Tinson.

Bloomberg was the first to report the layoffs. The plant employs 3,374 hourly workers and 206 workers, according to the Stellantis website.

Belvidere has been idling since the end of March and was also down for a week in February, due to the shortage of chips used in consumer electronics, including automated driving functions, infotainment systems and heated seats.

The Illinois plant will also not be operating next week and has lost production of more than 67,000 vehicles, according to estimates by AutoForecast Solutions LLC. Consulting firm AlixPartners LLP reports that in total, the auto industry could lose $ 110 billion this year due to the scarcity of chips.

Auto demand has recovered faster than the ability of automakers to rebound from the shutdowns caused by the pandemic last spring, a situation that was exacerbated by the shortage of chips. Cherokee sales fell 29% year over year in 2020, compared to 14% overall for the Jeep brand. The first quarter of this year was brighter, with Cherokee sales increasing 13%.

Still, the crossover market is competitive with more recent offerings like Ford Motor Co.’s Bronco Sport, Hyundai Santa Fe and Kia Sorento gaining attention, said Sam Fiorani, vice president of forecasting at AutoForecast. Solutions. The Cherokee has undergone few changes since its debut for the 2014 model year.

“The extreme competition in crossovers has made it a tight market for the Cherokee,” he said. “And stacking the semiconductor issue, production at Belvidere has been in the bubble for a whole year.”

Even before the pandemic and the flea shortage, Belvidere’s workforce and production was declining. Prior to its merger with French automaker Groupe PSA, Fiat Chrysler Automobiles NV cut the third shift and 1,300 jobs at the plant in February 2019. In February, Stellantis laid off an additional 150 employees.

But Stellantis has said it will not shut down Belvidere during 2019 labor negotiations with the United Auto Workers union, which did not immediately comment on the latest layoffs on Friday afternoon. The deal includes a $ 55 million investment in the Cherokee plant and new models on the same platform, though the automaker has not formally shared those plans.

Representatives of UAW Local 1268, which represents workers at the plant, could not be reached on Friday afternoon.

Stellantis has started making changes to its operations since it merged to become the world’s fourth-largest automaker, which closed in January. Earlier this month, it dispersed its SRT performance division into the engineering departments of its vehicle brands, although the company has confirmed that it will continue to produce Dodge SRT-branded vehicles and other trucks. and high speed SUVs. This decision did not include layoffs.

In January, Carlos Tavares, CEO of Stellantis, said the transatlantic merger offers the geographic footprint and size to provide a ‘shield’ against layoffs as the industry undergoes a transformation to electrified, autonomous, connected and more vehicles. costly that require billions of dollars in capital.

Industry analysts and those who have worked with Tavares have said he is known as a good cost reducer and a pro at managing and improving manufacturing efficiency.

“There is a lot more to do than just cut jobs” to save money, Tavares said at the time. “Finally, there are times you can’t avoid, but there is a lot more to do.”

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