Fiat Chrysler Automobiles NV said Wednesday that it would lay off 1,420 workers at two Sterling Heights plants starting July 5. Automotive experts believe that the move is tied to SUVs’ increased popularity among U.S. consumers as gas prices have hit record lows.
While 1,420 workers will be sent home indefinitely, 1,900 more will keep working at the Sterling Heights Assembly plant and Sterling Stamping plant. The company has resorted to non-permanent layoffs in recent moths due to lackluster sales of its Chrysler 200 line. The assembly plant currently produces only the mid-sized sedan.
The 200 line will be soon discontinued, the automaker also said. FCA argued that the layoffs are necessary to ‘align production with demand.’ Chrysler 200 hasn’t been produced since February, and production was supposed to resume this week. But the company said that it needed one more week to restart production. In the meantime, many of the plant’s production workers have been put on a temporary leave from their job.
FCA also said that 1,300 workers at the assembly plant and 120 workers at the Sterling Stamping plant will lose their jobs. The company pledged to offer workers full-time jobs in other facilities “as they become available.”
Chrysler admitted that there’s a growing demand for SUVs and trucks. The company’s plants that produce these vehicles reportedly run six days a week 20 hours per day to keep up with the demand.
The workers left without their position can now apply for an hourly job at the company’s SUV and truck assembly plants.
Norwood Jewell, VP of the United Auto Workers, noted that Chrysler is not the only U.S. maker that faces a slump is its small car sales. Jewell deemed the move ‘unfortunate’ but not unexpected because the growing demand for larger vehicles is evident.
According to Labor and Economics Associates, UAW members will receive about 70 to 75 percent of their gross pay after the lay-off. LEA consultants calculated that each member is entitled to unemployment benefits and 95 percent of their net pay. UAW wouldn’t confirm the figures.
According to the union’s contract with the FCA, workers who lost their jobs will be awarded up to $50,000 relocation bonus if they agree to get an out-of-market position. If they don’t, they’ll have an “inactive status” and no further benefits, the contract states.
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