Layoffs hit Jeep Cherokee plant as sales slow
Stellantis NV is indefinitely laying off 150 workers at the plant producing the Jeep Cherokee crossover, the transatlantic automaker said Tuesday.
The job cuts are happening at the company's Belvidere Assembly Plant in north-central Illinois more than a month after Fiat Chrysler Automobiles NV and French rival Groupe PSA merged. Belvidere employs 3,374 hourly and 206 salaried workers on two shifts, according to the company's website. The layoffs come in response to falling demand of the little sister to the larger, top-selling Jeep Grand Cherokee.
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"The Stellantis plant in Belvidere, Ill., is rebalancing its staffing levels as it realigns production to meet global demand for the Jeep Cherokee," company spokeswoman Jodi Tinson said in a statement. "Following a review of its operations, 150 people will be indefinitely laid off, starting Feb. 20, 2021. The Company will make every effort to place indefinitely laid off hourly employees in open full-time positions as they become available based on seniority."
A United Auto Workers spokesman did not immediately have a comment. Representatives at UAW Local 1268, which represents the plant's workers, could not be reached.
Cherokee sales fell 29% year-over-year in 2020 to 135,855 vehicles. That was a larger decline than any other Jeep vehicle still in production as the COVID-19 pandemic took a 14% hit to the adventure brand's sales.
Meanwhile, the Grand Cherokee's sales fell 14% last year, and Jeep is expanding its lineup with the three-row Grand Cherokee L that is slated to launch at Stellantis' new Detroit assembly plant before the end of next month.
Stellantis has begun to make some changes to its operations since its $52 billion merger closed Jan. 16. Earlier this month, it dispersed its SRT performance division into the engineering departments of its vehicle brands, though the company confirmed it will continue to produce SRT-branded Dodge vehicles and other high-speed trucks and SUVs. That decision did not include layoffs.
Stellantis CEO Carlos Tavares last month said the transatlantic tie-up offers the geographic footprint and size to be a "shield" against layoffs as the industry undergoes a transformation toward autonomous, connected and more-expensive electrified vehicles that requires billions of dollars in capital.
"There are many more things to do than just cutting jobs" to save money, Tavares said at the time. "Eventually, there are moments you cannot avoid it, but there are many more things to do."
Industry analysts and those who have worked with Tavares have said he is known as a fair cost-cutter and is a pro in management and boosting manufacturing efficiencies.
"There may be some book balancing as Stellantis becomes the parent company," said Jessica Caldwell, executive director of insights at auto information website Edmunds.com Inc. "That’s pretty typical when two really big companies merge together. They're looking to find some efficiencies and more profitability, and what that requires is a bit of review of overall operations to see where things can be streamlined."
Although the Cherokee nameplate this week came under fire from the Cherokee Nation's principal chief over "cultural appropriateness," the vehicle itself is well-recognized and fills a significant segment of the Jeep lineup, Caldwell said.
Over the past year, however, it's been buyers less affected by the pandemic who have taken advantage of the surging stock market, rising house prices and low interest rates to buy larger, pricier vehicles.
Additionally, although Edmunds last month predicted U.S. sales will hit 15.5 million vehicles this year, a 6.5% increase from 2020, that would still be well below 2019's more than 17 million sales. And a global shortage of microchips since then has caused automakers, including Stellantis and its crosstown rivals, to stop production temporarily at some plants.
"The industry is still looking at not-a-great 2021," said Stephanie Brinley, principal automotive analyst for North and South America at IHS Markit Ltd.
And although SUVs remain popular, the Cherokee — last redesigned in 2014 —faces growing competition as new models come to market.
"Both the B and C segment utility vehicles are getting a lot of attention with new entries and continuing models," Brinley said. "The competition is only getting more fierce, and the market has been contracting."