Vehicle manufacturer Stellantis is set to implement extensive workforce reductions at its U.S. facilities later in the year.
Up to 2,450 factory employees facing indefinite layoffs.
This decision comes as the company phases out production of its older Ram 1500 pickup truck model in Michigan.
Since the introduction of a new generation Ram 1500 in 2018, the outgoing model has primarily served as an affordable option for first-time buyers and commercial clients.
Currently, this truck is manufactured alongside Jeep’s luxury SUVs, the Wagoneer and Grand Wagoneer, at the company’s Warren Truck Assembly facility near Detroit.
The latest iteration of the Ram 1500, which has undergone updates for the upcoming 2025 model year, will continue to be produced at a separate nearby plant without interruption.
A company spokesperson confirmed via email that the Warren Truck Assembly Plant will cease production of the Ram 1500 Classic later this year, coinciding with the launch of the new Ram 1500 model.
While the discontinuation of the “Classic” Ram 1500 was anticipated, Stellantis has not announced a replacement vehicle for this product line. This lack of information has raised concerns among local authorities, plant workers, and the United Auto Workers (UAW) union representing the facility’s employees.
In a recent interview with CNBC, Ram CEO Chris Feuell disclosed that the “Classic” variant would be discontinued by year-end.
UAW President Shawn Fain expressed strong disapproval of Stellantis’ leadership regarding these job cuts. In a statement, Fain criticized CEO Carlos Tavares, highlighting the contrast between workforce reductions and the CEO’s substantial pay increase.
The layoffs are expected to commence in October, though the final number of affected workers at the Warren plant may be lower than initially projected. Some employees might be reassigned to other positions or facilities within the company.
These job cuts are part of a larger trend of production reductions at Stellantis, driven by sales challenges and cost-saving initiatives.
Tavares has been focused on reducing expenses since Stellantis was formed through the merger of Fiat Chrysler and France’s PSA Groupe in early 2021. This strategy is integral to his “Dare Forward 2030” plan, which aims to boost profitability and double the company’s revenue to 300 billion euros by 2030.
Last week, Stellantis extended a comprehensive voluntary buyout offer to its U.S. salaried workforce, aiming to further reduce headcount and expenses. The company warned that if voluntary departures fall short of targets, involuntary terminations may follow.
This cost cutting measure follows disappointing first-half results. Sluggish sales and excessive manufacturing costs are both to blame. Stellantis reported a 48% decrease in profits for the first 6-months of 2024 versus the same period in 2023.
“It is an understatement to say that the first-half 2024 results were disappointing and humbling,” Mr. Tavares said on a call with analysts after the earnings report. “This is a bump on the road that we are now fixing and that we are going to fight against to make sure that we can rebound from here, and that we fix the operational issues that we face.”
Tavares also recently stated that too many vehicles are being produced that need repairs before getting to dealerships. The Ram 1500 plant in Sterling Heights, Michigan was said to be the biggest offender.
Other recent company news shows the company is getting dealer complaints about rising inventory rates. Some dealers are reducing prices to move inventory, resulting in lower profits.
Stellantis was formed in 2021 when Fiat Chrysler and Peugeot S.A. merged. It is known for the brands Chrysler, Jeep, Ram and Dodge in North America.
