The automaker Stellantis announced it will be dropping shifts at two Jeep plants, one each in Michigan and Ohio. The move, the company said, will result in job losses.
The cuts will affect the Detroit Mack Assembly Plant, which makes the Jeep Grand Cherokee, and the Toledo Assembly Complex, which makes the Jeep Wrangler and Gladiator.
In a statement, Stellantis cited “the need to manage sales of the vehicles they produce to comply with California emissions regulations that are measured on a state-by-state basis.”
The company said it will be issuing advanced notices to employees in compliance with the federal Worker Adjustment and Retraining Notification Act. Close to 2,500 employees at the Detroit Mack plant and more than 1,200 at Toledo Assembly were given notice of potential layoffs.
A Stellantis spokesperson said those numbers are likely overestimates, though. “WARN notices included more employees than will ultimately be impacted out of an abundance of caution to give them notice even if not legally required," said Jodi Tinson.
On Wednesday, Stellantis sought to overturn a 2019 agreement with rival automakers and the California Air Resources Board. Stellantis said the California Framework Agreement was a “double standard, which also destabilizes our production schedules."
Erik Gordon, a University of Michigan business professor, said that's a common refrain from automakers. “The car companies have a history of blaming new regulation on price escalations for their cars. If you go all the way back to when catalytic converters were required, car companies said ‘the cost of these things will put us out of business,’” Gordon said. “So, you know, regulators are good whipping boys and girls and clearly they add costs, but that's not the only reason for the layoffs.”
Gordon cited rising costs due to the recent contract agreement between Stellantis and the United Auto Workers union agreement as a factor behind the layoffs. The UAW strike lasted six weeks.
“They just agreed to a record-setting wage hike with the UAW that's going to have more effect on their costs than California regulators,” he said.
Gordon also said a slump in consumer spending and low confidence in the economy could help explain the expected layoffs. "If you're worried about the economy, you're much less likely to go out and spend $30-, $40- or $60,000 on a new car or Jeep or truck.”
“In addition to the layoffs at the two assembly plants, Stellantis has offered buyouts to about half of its non UAW workforce. So working at Stellantis is a little more of an iffy thing going forward,” Gordon observed.
The two Stellantis plants together have more than 10,000 employees.
In a statement, Democratic state House Majority Floor Leader Abraham Aiyash said, “Layoffs, no matter when they happen, are never a good thing for dedicated workers, and to do this right after the sacrifices workers made during the historic strike is a slap in the face.”
A representative for the UAW did not respond to requests for comment.
