DETROIT (AP) — About 1,100 workers at the Stellantis Jeep factory in Toledo, Ohio, are facing layoffs early next year as the company takes further steps to cut high inventory at dealerships.
Stellantis said Thursday that the Toledo South plant, which makes the Jeep Gladiator midsize pickup truck, will go from two daily shifts to one as early as Jan. 5.
Sales of the Gladiator, the pickup truck version of the Jeep Wrangler SUV, are down nearly 21% so far this year to 36,519, according to Motorintelligence.com.
“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,” Stellantis said.
A message was left Thursday seeking comment from the United Auto Workers union, which represents employees at the Toledo plant.
Under the union contract with Stellantis, laid-off workers will get supplemental pay for one year that, when combined with state unemployment benefits, will equal 74% of regular pay. They’ll also get health insurance coverage for two years, Stellantis said.
The move is the latest action by the company as it struggles with high inventory on dealer lots in the U.S. Stellantis' overall sales have been down most of the year in the U.S., and discounts to counter high sticker prices that came after a poor second quarter didn’t work.
In August, the company warned that it could lay off as many as 2,450 of the 3,700 union workers at the pickup truck plant in Warren, Michigan, north of Detroit. It said at the time the number of job cuts will be lower because of early retirement offers.
In the U.S., Stellantis’ dealer inventory ballooned to just over 430,000 vehicles in June. Third-quarter sales fell 20%, and they’re down over 17% for the first nine months. The rest of the auto industry saw sales increase 1% from January through September.
CEO Carlos Tavares said in October that inventory dropped by 52,000 in recent months, and the company is trying to get below 350,000 by Christmas for a “fresh start” going into the new year.
Last month the world's fourth-largest automaker, which was created by the 2021 merger of PSA Peugeot and Fiat Chrysler Automobiles, reported a 27% drop in net revenues for the third quarter.
Tavares has been under fire from U.S. dealers and the United Auto Workers union this year, caught off guard by too many high-priced vehicles on dealer lots. Tavares has been trying to cut costs by delaying factory openings, laying off union workers and offering buyouts to salaried employees.
The union is threatening to strike against the company over delays in reopening an assembly plant in Belvidere, Illinois, which Stellantis blames on a slowing market.