Fiat Chrysler to lay off 1,300 at Michigan plant

Apr 06, 2016, 2:54 PM EDT
Fiat Chrysler
(Source: Matt Cotton/flickr)

Fiat Chrysler announced it will lay off 1,300 at a Michigan plant amid slow sales.

Reuters reports:

Fiat Chrysler Automobiles said on Wednesday it is laying off about 1,300 workers indefinitely and ending one of the two shifts at its Sterling Heights, Michigan plant that makes the slow-selling midsize Chrysler 200 sedan. U.S. sales of the Chrysler 200 were down 63 percent in the first three months of this year from a year earlier, as FCA has de-emphasized sales of the model which had been often sold to rental agencies. The lay offs will be effective July 5. The company did not say how long it would continue to make the Chrysler 200. In January, Fiat Chrysler Automobiles (FCA) Chief Executive Sergio Marchionne said the company would cease making the midsize sedan as well as the compact Dodge Dart, unless a partner could be found to keep the production going.

The Detroit Free Press notes:

"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. "FCA is not the only company experiencing a slow market for small cars." Still, the layoff is unusual for FCA, and for the U.S. automotive industry, which is in the middle of five consecutive years of record sales.  FCA has added about 11,000 hourly workers in the U.S. since 2011 and has reported monthly sales gains for 72 consecutive months. The layoffs come about three months after FCA CEO Sergio Marchionne said the automaker plans to eventually phase out production of the Chrysler 200 and the Dodge Dart. In January, Marchionne said the two models  "will run their course," but the company has not said when production will end. Marchionne also has said FCA is looking for a partner to potentially build small cars for the automaker at some point in the future. Marchionne is in the middle of refocusing the company's strategic plan and is shifting its North American production footprint to focus on SUVs and pickups in the U.S. and smaller vehicles in Mexico.

The Wall Street Journal writes:

Through March, 57% of vehicles purchased in the U.S. were classified as light trucks, a trend stoked by cheap gasoline. 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. It is now on the heels of passing Toyota Motor Corp. as the No.3 seller in the U.S., a position it hasn’t held since 2006. Fiat Chrysler’s sales gains have been built on the strength of its Jeep SUV and Ram truck brands. Weakness in small cars has been a setback for a company that had once pointed to the Fiat 500 compact vehicle as proof that it could excel in that segment, and invested heavily to update the Dart and 200.