Further Layoffs Announced from Detroit Big Three Automaker Due to Poor Earnings

During its earnings call for the first half of 2024 last week, the Jeep and Dodge automaker provided disappointing information. 

He attributed the results to a “challenging industry context” and its own “operational issues.”

The automaker is taking drastic measures to reduce the number of workers it employs in order to help cover losses of more than 48%. 

However, in the newest spate of layoffs at the Warren Truck plant, Stellantis spokesperson Jodi Tinson said the number of job cuts could be lower. Tinson anticipates fewer layoffs because of early retirement offers already in progress and seniority bumping rights.

The company’s net profits fell by 48%. Stellantis made $6 billion from January to June this year compared to making $12 billion during the same period in 2023.

Shawn Fain, President of United Auto Workers, issued a statement criticizing Tavares’ management of Stellantis. “The American taxpayer has invested in Stellantis. Workers have invested in Stellantis. Consumers have invested in Stellantis. It’s time for Stellantis to invest in us.”

Production volumes have been inconsistent since the pandemic derailed supply chains. Expenses have also soared since the UAW strike and the microchip shortage. The fall in profits has put companies like Stellantis in a difficult position. It is increasingly difficult to find a balance between investing in workers and prioritizing net profits.

Mark Wakefield, managing director in Detroit for consultancy firm, AlixPartners, weighed in on the need to restructure automakers to make electric vehicles profitable. “In today’s environment, it’s less about speed to market, but having a compelling offering and cost of doing it.”

They say that the owners of Jeep and Dodge are offering to buy out their salaried employees at all of their North American locations in an effort to cut down on the white-collar workers who aren’t covered by the UAW contract.

This package includes three months of outplacement services, severance pay based on years of service as of Sept. 30, 2024, a lump sum cash payment to cover healthcare costs and the vesting of their 401(k)s.

Stellantis emphasized the Voluntary Separation Program’s significance to the business in an email to employees that was shared with the Detroit Free Press. 

“We wanted to give you some advance notice so you can thoughtfully consider whether this opportunity might be of interest to you,” Tobin Williams, Senior Vice President of Human Resources and Transformation at Stellantis North America, stated.

“Transparently, it is important to note that subsequent involuntary actions may be necessary if we do not meet our objectives through voluntary means.”

The automaker used a very underhanded method to fire about 400 of its white-collar workers in March 2024 who were not covered by the UAW’s collective bargaining agreement.

Stellantis claimed in the email that the company was holding an “important operational meeting that requires specific attention and participation” and that “employees are expected to work from home” unless a manager tells them otherwise, which was the reason for the mandatory remote work day.

In a statement to the Detroit Free Press, Stellantis defended its latest moves as necessary in order to keep its operations going.

“One of those actions is offering a voluntary separation package to U.S. employees in certain functions. More detailed information will be provided to eligible employees in mid-August.” 

On August 1, the closing share price of Stellantis N.V., which is listed on the New York Stock Exchange under the symbol STLA, decreased by 2.2% to $16.32.

The automaker said layoffs at the Warren Truck assembly plant outside of Detroit could come as early as October. Reuters reported the plants would move from two shifts to one in general assembly.

In a statement, Stellantis said: “With the introduction of the new Ram 1500, production of the Ram 1500 Classic at the Warren (Michigan) Truck Assembly Plant will come to an end later this year.”  

Laid-off union members would receive 52 weeks of supplemental unemployment benefits from the company. They would also receive 52 weeks of transition assistance, according to Stellantis. The automaker also said they will be entitled to two years of healthcare coverage.

While the remaining workers will produce the lower-volume Jeep Wagoneer and Grand Wagoneer SUVs, workers at other plants will be vulnerable to more layoffs. The cuts at Warren Trucks will also impact auto parts workers. A Bridgewater Interiors factory in Detroit has also announced it will lay off 63 workers around September 30.

The committee wrote: “Warren Truck is now a critical battleground in the global war on jobs. Autoworkers must make this the start of a broad counteroffensive, counterposing workers’ right to employment and a decent standard of living against management’s so-called ‘right’ to profits.” The collective plans to protest against both Stellantis and union reps.

The union’s Vice President, D. Robinson, admitted that they knew the layoffs were looming and did not warn the workers or even prepare a response. Robinson told Detroit News: “It’s been in discussions for some time. It really was not much of a surprise for me. We hate to see it happen, but we did know the possibility was out there.”

Electric vehicle sales and autonomous technology performance have not kept up with industry expectations. Reduced EV capacity and delayed timelines have stalled, and even canceled, some planned spending. The market is struggling to find demand for EV vehicles from mainstream buyers.