Fiat Chrysler to Cut 1300 Jobs at Michigan Sedan Factory – Wall Street Journal
Fiat Chrysler Automobiles NV
plans to cut 1,300 jobs this summer at the Michigan factory where it assembles a small Chrysler sedan, its first large-scale cutback since 2009 and triggered by a sharp decline in demand for cars.
The affected workers will lose their jobs effective July 5. Wednesday’s announcement involves 41% of the factory’s hourly workforce. About 120 other workers at a nearby factory that produces metal parts for the sedan also will lose their jobs.
Such large-scale cuts, once a common practice among the Detroit Three, are now rare amid recent strong annual industry sales gains and cleaner balance sheets at General Motors Co.
, Ford Motor Co.
and Fiat Chrysler.
The move accelerates Chief Executive Sergio Marchionne’s shift to an emphasis on trucks and sport-utility vehicles away from small-car production in the U.S. He has earmarked $1 billion to adjust its U.S. manufacturing to the changes. The Sterling Heights, Mich., plant that will lose the workers is expected to be revamped to build a pickup truck or SUV. Details of the model weren’t disclosed.
The news is a blow to Fiat Chrysler and the United Auto Workers union which have used the auto maker’s recovery since its 2009 bankruptcy to bolster its their images. The auto maker has said it has hired 11,000 Detroit-area workers since its bankruptcy and posted 72 consecutive months of year-over-year sales increases.
Norwood Jewell, a UAW official, said the move was not a surprise. “Fiat Chrysler is not the only company experiencing a slow market for small cars,” he said.
Ford is moving some of its small car production to Mexico. On Tuesday, it said it would spend $1.6 billion to construct a new Mexican factory for small cars, opening space to build more trucks in the U.S.
Fiat Chrysler’s Dodge Dart small car, which is built alongside Jeep SUVs in Illinois, also will be dropped from U.S. production in the future in favor of a pickup truck or SUV. The 200 and the Dart at one time were lauded as evidence the company could successfully make small cars in America.
Through March, 57% of vehicles purchased in the U.S. were classified as light trucks, a trend stoked by cheap gasoline. Fiat Chrysler is on the cusp 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.
Mr. Marchionne in January had said the Dart and Chrysler 200 could be phased out if a production partner wasn’t found, a move that likely decreased consumer confidence in those nameplates. Last month, Mr. Marchionne also told dealers the compact Fiat 500 lineup would be streamlined.
Sales of the 200 declined more than 60% this year through March compared with a year earlier, according to Autodata Corp., while Dart sales slumped 30%. Fiat Chrysler is sitting on five months’ worth of unsold Chrysler 200 cars and three months’ worth of Darts.
The auto maker is now offering discounted financing on the Dart and 200 in lieu of the cash rebates that previously had been offered.
Write to Jeff Bennett at email@example.com