DETROIT — Approximately 1,100 employees at the Stellantis Jeep plant in Toledo, Ohio, are facing impending layoffs early next year as part of the company’s efforts to reduce the surplus of vehicles sitting at dealerships.
Stellantis announced on Thursday that the Toledo South facility, which produces the Jeep Gladiator midsize pickup, will shift from operating two shifts each day to just one, starting as early as January 5.
Sales for the Gladiator, which is essentially the pickup variant of the Jeep Wrangler SUV, have decreased significantly, dropping nearly 21% this year, equating to a total of 36,519 units sold, according to figures from Motorintelligence.com.
“These actions are tough but essential to allow the company to regain its competitive positioning and potentially restore production levels to what they once were,” Stellantis remarked.
A request for comment was made to the United Auto Workers (UAW) union, representing the Toledo workforce, but no response was received as of Thursday.
According to Stellantis, laid-off employees will receive supplemental payments for up to one year, which combined with state unemployment assistance, will total around 74% of their standard wages. Additionally, health insurance will be provided for two years.
This decision marks yet another step by the automaker as it grapples with excess inventory on lots across the United States. Overall sales for Stellantis have declined for much of the year, and recent attempts to mitigate this through discounts following a disappointing second quarter have not been effective.
In August, the company indicated that it might have to lay off as many as 2,450 of the 3,700 union workers at its pickup truck facility in Warren, Michigan, located north of Detroit. However, it noted that the final number of layoffs would be lower due to early retirement incentives offered to some employees.
As of June, Stellantis faced a dealer inventory exceeding 430,000 vehicles in the U.S. Sales fell by 20% in the third quarter, and overall sales sank over 17% in the first nine months of the year. In contrast, the broader auto industry observed a slight sales increase of 1% from January to September.
Recent comments from CEO Carlos Tavares indicate that inventory levels have decreased by 52,000 units in the past few months, with the goal of reducing stock below 350,000 by Christmas for a “fresh start” entering the new year.
Last month, Stellantis, renowned as the fourth largest global automaker following its 2021 merger of PSA Peugeot and Fiat Chrysler, disclosed a 27% decline in net revenues for the third quarter.
Tavares has faced criticism this year from U.S. dealers and the United Auto Workers union, caught off guard by an excess of high-priced vehicles available at dealerships. To contain costs, he has been postponing factory openings, implementing layoffs for union personnel, and proposing buyouts for salaried staff.
Furthermore, the union has warned of potential strike actions over the delays concerning the reopening of an assembly plant located in Belvidere, Illinois, a situation Stellantis attributes to a decelerating market.