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About 1,100 workers at the Stellantis Jeep factory in Toledo, Ohio, face layoffs early next year as the car maker addresses high vehicle inventories across its US dealerships.
The Toledo South plant, which manufactures the Jeep Gladiator midsize pickup, will reduce operations to a single shift on January 5, 2024.
The Gladiator, Jeep's pickup truck variation of the Wrangler SUV, has experienced a decline in sales, with numbers down nearly 21% to 36,519 units this year, according to industry data. Based on the figures, Stellantis is taking steps to streamline production and cut back on inventory, which has created an oversupply at dealerships.
“These are difficult actions to take, but they are necessary to enable the company to regain its competitive edge and eventually return production to prior levels,” a spokesperson said.
The company has yet to respond to further inquiries from the United Auto Workers (UAW) union, which represents the affected workforce.
Under Stellantis' current agreement with the UAW, employees who are laid off will receive supplemental pay for up to a year. The pay, combined with state unemployment benefits, will total approximately 74% of regular wages, while health insurance coverage will continue for two years.
The decision to cut shifts and reduce the workforce at the Toledo facility marks the latest move in car maker’s broader efforts to manage costs and control vehicle inventory, as the company contends with declining sales in the US.
In August, Stellantis warned that layoffs were likely for up to 2,450 of the 3,700 unionized employees at its Warren, Michigan, pickup truck plant. The company indicated, however, that early retirements would reduce the number of affected workers. Across the US, Stellantis' inventory swelled to over 430,000 vehicles in June, while industry-wide sales grew by 1% from January through September, Stellantis’ third-quarter sales dropped 20%, and year-to-date numbers are down over 17%.
Stellantis CEO Carlos Tavares announced in October that inventory levels had fallen by approximately 52,000 units over recent months. Tavares aims to reduce the total inventory to below 350,000 vehicles by the end of December to start the new year with a leaner lineup and healthier balance sheets.
The UAW has voiced growing concerns about the cuts. The union is considering a strike in response to Stellantis' decision to postpone the reopening of an assembly plant in Belvidere, Illinois, which the company says is due to softening demand.
Layoffs can create uncertainty within an organization, particularly for employees left behind who may worry about future job stability. Maintaining clear communication and transparency with remaining employees will be essential for Stellantis to manage morale, support productivity, and navigate the impact of these recent job losses.
Offering a generous severance package, as Jeep has done, can play a critical role in mitigating the impact, both on departing employees and on those who remain. By providing extended supplemental pay and health insurance, Stellantis has demonstrated a commitment to supporting its workforce during the transition, lessening the immediate financial and emotional strain on affected employees.
Moreover, a robust severance package reflects positively on Stellantis' employer brand, enhancing its reputation as a responsible employer. Such practices are particularly valuable in the competitive tech and manufacturing sectors, where attracting and retaining top talent is increasingly tied to perceptions of a company's values and its treatment of employees, especially in choppy financial waters.
