FCA indefinitely laying off 1,420 Detroit-area workers

Michael Wayland, The Detroit News

April 7, 2016

Changing consumer preference from cars to SUVs and trucks is largely to blame for a shift being cut at the Sterling Heights Assembly plant.

About 1,420 production workers face indefinite layoffs at the facility and a supporting stamping plant that build the Chrysler 200 mid-size sedan.

Fiat Chrysler Automobiles NV informed the United Auto Workers as well as city and state officials of the layoffs Wednesday afternoon. The indefinite layoffs will begin July 5. About 1,900 employees will remain working on one shift at the assembly plant.

The decision comes after months of temporary layoffs due to a lack of demand for Chrysler’s midsize sedan, the facility’s only vehicle. In a crowded market segment with declining demand, the lackluster Chrysler 200 never caught on and will be discontinued. Fiat Chrysler said the shift cut is “to better align production with demand.”

Production of the Chrysler 200 at Sterling Heights Assembly stopped on Feb. 1 and the plant’s 3,000-plus employees were placed on temporary layoffs. Production was scheduled to resume at the 5-million-square-foot assembly plant this week, but a company spokeswoman on Wednesday said that was pushed back to next week.

Indefinitely laid-off employees, including 120 at Sterling Stamping, will be placed in open full-time positions in other plants “as they become available within the Detroit labor market based on seniority,” the company said.

The layoffs are “a direct result of shifting demand toward trucks and SUVs,” Fiat Chrysler said in a statement.

“Our truck and SUV plants are running six days a week about 20 hours a day,” the company said. “And while 1,300 people will be impacted by layoffs (at Sterling Heights Assembly), we have been able to add 11,000 hourly jobs in Michigan since 2009 to keep up with that demand.”

UAW Vice President Norwood Jewell, who heads the union’s Fiat Chrysler department, said while the shift cut is “unfortunate, it is not unexpected.”

“FCA is not the only company experiencing a slow market for small cars,” he said in a statement. “On a bright note, there is a strong demand for larger-sized vehicles. The company has been planning to increase its capacity to build more trucks and SUVs.”

“I believe that in the long term this move will be a positive one for our members and the company.”

Union employees under the UAW’s contract with the automaker are paid on average about 95 percent of their after-tax pay while laid off, including state unemployment benefits. That ends up being 70-75 percent of their gross pay, according to Art Schwartz, a former longtime negotiator with General Motors Co. and president of the Labor and Economics Associates consultancy firm.

A spokesman for the UAW was unable to immediately provide additional details on pay and benefits for the laid-off employees.

The contract also states that employees placed on indefinite layoff can be offered out-of-market jobs (greater than 50 miles). If they accept, they will receive up to $50,000 as a relocation allowance, $10,000 of which will be provided “as a signing bonus to cover miscellaneous up-front cash expenditures.”

If they decline, the employee is placed on “inactive status” with no company-provided income or benefits but remain “eligible for additional job opportunities,” according to the contract.

Neither UAW Local 1700 President Charles Bell or UAW Local 1268 President LaShawn English, both of whom represent production workers at the two Sterling Heights facilities, immediately responded for comment.

The layoffs come 10 weeks after Fiat Chrysler CEO Sergio Marchionne outlined a business plan that included ceasing production of the Chrysler 200 and the Dodge Dart compact sedan to free up space in U.S. plants for hot-selling, more profitable Ram pickups and Jeep SUVs.

Chrysler 200 sales through the first three months of the year in the United States were down 63.4 percent compared to the same time period in 2014. Fewer than 18,000 cars sold.

Karl Brauer, Kelley Blue Book senior analyst, said the Chrysler 200 — which was completely redesigned in 2014 — is outclassed: “A couple years ago it likely could have chipped away the segment leaders’ market share. In 2016, there are simply too many other compelling options, both within and outside the midsize sedan segment, for a car like the 200 to grow or even maintain its volume.”

Sales of the Dodge Dart also have been problematic: It’s taken a 32.8 percent dive so far this year. However, the 4,000-plus workers at Belvidere Assembly in Illinois have not been been as negatively affected because that plant also produces the Jeep Patriot and outgoing Jeep Compass. Sales of those sport utilities are up 42.8 percent and down 3.2 percent this year, respectively.

Marchionne said the plan to cease production of the cars was due to a “permanent shift” in consumer preference from cars to crossovers and sport utility vehicles. The company plans to use freed-up plant capacity to build more hot-selling Ram Truck pickups and Jeeps.

Last year marked the fifth time in six years that light-duty trucks, including some SUVs and crossovers, outsold cars. Trucks accounted for 55.7 percent, or 9.7 million, of vehicles sold last year, up more than 1.1 million from 2014. That’s the segment’s highest percentage since 2004, according to Autodata Corp.

Marchionne said the company was continuing discussions with potential partners that could “provide a product from their facilities” to allow the company to cover gaps in the lineup left by the Dart and 200.

Prior to Marchionne’s comments on ceasing production, there were media reports during contract discussions with the UAW last year that the company planned to move production of the 200 and Dart to Mexico. But the company never confirmed those plans.

Moving the production to Mexico wouldn’t have been unprecedented. Several automakers, including crosstown rival Ford Motor Co., have announced significant investments in Mexico. Ford on Tuesday confirmed plans to build a $1.6 billion assembly plant in Mexico for small-car production.

The Sterling Heights shift cut is the latest twist for workers at the plant. The plant was scheduled to be shuttered during Chrysler’s 2009 bankruptcy. The reborn company eventually changed its plans and invested more than $1 billion to renovate the facility, including new paint and body shops, for production of the 200.

mwayland@detroitnews.com

(313) 222-2504

Headline

Fiat Chrysler Automobiles NV on Wednesday announced a $500 million investment in Argentina for production of a new vehicle for the Latin American market.

The plant is scheduled to launch production in the second half of 2017 and will produce more than 100,000 vehicles a year, according to the automaker.

“This plant will operate using the most advanced technologies available to FCA today,” said FCA CEO Sergio Marchionne in a statement. “This choice demonstrates a major strategic change, giving the Córdoba plant a central role in FCA’s industrial activities in Latin America.”

The investment, Fiat Chrysler says, includes retooling the facility, installation of more than 150 robots in the body shop, supplier development, training and research and development. The company did not say what vehicle will be built at the plant.

mwayland@detroitnews.com

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1- Blue collar got laid off - why no white collar laid off?

2- Why they ship jobs to Argentina - thanks to Clinton Nafta.

Fiat Chrysler to lay off 1,300 at Chrysler 200 plant

Brent Snavely, Detroit Free Press

April 6, 2016

The cutbacks at the Sterling Heights plant reflect a larger trend of declining sales of passenger cars in the U.S.

Fiat Chrysler Automobiles said today it will lay off about 1,300 workers at its Sterling Heights Assembly Plant as it cuts back on production of its poor-selling Chrysler 200 midsize sedan, amid growing U.S. demand for crossovers and SUVs.

The automaker told the UAW, its workers and the State of Michigan that it is eliminating a shift of workers at the plant starting July 5. Another 120 workers will be laid off at the nearby Sterling Stamping plant.

"While today's announcement of a shift reduction at Sterling Heights Assembly is unfortunate, it is not unexpected," UAW Vice President Norwood Jewell said in a statement. "FCA is not the only company experiencing a slow market for small cars."

The company said it will place the indefinitely laid-off workers in open positions as they become available at other plants.

Still, the layoffs are unusual for FCA and for the U.S. automotive industry, which is in the middle of five consecutive years of record sales. It is the first large-scale U.S. job cut by the automaker since it emerged from bankruptcy in 2009. FCA has added about 11,000 hourly workers in the U.S. since 2011 and has reported monthly sales gains for 72 consecutive months.

The layoffs come about three months after FCA CEO Sergio Marchionne said the automaker plans to eventually phase out production of the Chrysler 200 and the Dodge Dart. In January, Marchionne said the two models  "will run their course," but the company has not said when production will end. Marchionne also has said FCA is looking for a partner to potentially build small cars for the automaker at some point in the future.

Marchionne is in the middle of refocusing the company's strategic plan and is shifting its North American production footprint to focus on SUVs and pickups in the U.S. and smaller vehicles in Mexico.

The Sterling Heights plant is widely expected to gain production of the next-generation Ram 1500 pickup that is currently made at Warren Truck Assembly. But the transition, if it happens, isn't likely to occur for about 18 months or more.

Until then, the remaining 1,900 workers will continue to work sporadically. The plant has been shut down for the majority of the year.

FCA spokesman Gualberto Ranieri declined to comment on when the company would provide additional details about the timing or details of its U.S. production plans.

FCA's decision to eliminate a shift at the plant also comes one day after Ford confirmed that it will build a new plant in Mexico to make small cars starting in 2018. General Motors, while also emphasizing truck production, is continuing to build small cars in the U.S. It laid off about 500 workers at the assembly plant where the Chevrolet Sonic is built last fall and has moved those workers to other plants.

On Tuesday, the UAW called Ford's decision "very troubling."

The union was more optimistic about FCA's move Wednesday.

"The company has been planning to increase its capacity to build more trucks and SUVs," Jewell said. "I believe that  in the long term this move will be a positive one for our members and the company."

The Chrysler 200, while never viewed as perfect, was heralded as FCA's first competitive midsize sedan in years, and its design was initially praised by industry observers. The car also saved plant from being closed. In 2009, it was on a list of plants Chrysler planned to close as part of its bankruptcy reorganization.

Instead of closing the plant, FCA spent about $1 billion to retool it for the all-new Chrysler 200 and launched the new car in 2014 and sales rose to a high of 177,889 last year.

Still, sales of the Chrysler 200 have been falling faster than the overall decline of passenger car sales since November when the company cut back on dealer incentives.

Sales of all midsize cars have declined 2.2% over the first three months of this year, and sales of compact cars have declined 5.5%, according to Kelley Blue Book. Sales of the Chrysler 200, in contrast, have dropped 63% over the same period.

"This year continues to be a tough year for midsize sedans," said Jessica Caldwell, senior analyst for car shopping website Edmunds.com. "It is still the largest segment but ... their grip on the retail customer is definitely loosening."

FCA is having more success with the sales of trucks and SUVs. Sales of the Ram were up 14.4% this year, and Jeep sales were up 17.3%. The automaker's plants in Detroit, Warren and Toledo are running six days a week and about 20 hours per day amid the most robust industry sales on record.

Dispatch

Function of union hiring hall in which worker requirements from companies are logged, sorted and matched with union members’ skills, availability then members should be dispatched to the job.

It is obvious president Samuelsen and current leadership at TWU Local 100 are not serving or caring for the laid off members interests. They are forgotten - they did not have a say in layoff - those laid off members were in good standing, then why would Samuelsen and current leadership forget them? Out of sight out mind? 

Placement officer is a must at the unionhall for the laid off members - It is amazing how president Samuelsen and the current leadership have failed the laid off members,, Samuelsen and the current leadership were informed by the employer about the lay off earlier on however there was no plan to get them jobs from other companies, why

Should we be surprised that hundreds possibly now inching toward thousand of members were laid off, were not. The fact that even the most basic protections for the membership are ignored by president Samuelsen and the current leadership just reflects the sloppiness and lack of respect for our membership that pervades union hall. 

Thank you, president Samuelsen for your attention to the protection and job security of the membership entrusted to you. Just this layoff alone could be cause for president Samuelsen removal. But there are plenty of reasons to give him the boot, this breaks our heart. After all the union invented the concept of job security, only to see it diminished by those who lack any commitment to job protection.

We certainly would love to see Samuelsen leave, and the main reason is lay off - instead of setting our sights to be a highly nationally respected local Samuelsen has turned TWU Local 100 into just another troubled union.

All of this spells trouble for the membership. We need to take a hard look at what is becoming of TWU Local 100. Laid off members deserve better. Samuelsen and current leadership must take responsibility. Do the right thing. Resign.

Is Samuelsen protecting the chosen ones?

A laid off bus operator and station agent were wondering how come none of the members of the maintenance of way department are laid off? Are they equal to other departments or do they get a special treatment from our employer? 

They wonder when it will be their turn to be laid off? They wonder whether Samuelsen is only protecting track workers? Maybe there is more to the lay off than meets the eye.