DETROIT — Fiat Chrysler is laying off a full shift of 1,300 employees at its Sterling Heights Assembly Plant in suburban Detroit as the automaker transitions the factory away from production of the Chrysler 200.
In an emailed statement, FCA said it had notified state and local officials, as well as the UAW, today “that it intends to return the plant to a one shift operation, beginning July 5.”
FCA said it would place employees who will be laid off indefinitely into open full-time positions in metro Detroit as they become available, based on seniority.
Norwood Jewell, the Chrysler Department vice president for the UAW said in a statement: “While today's announcement of a shift reduction at Sterling Heights Assembly is unfortunate, it is not unexpected. FCA is not the only company experiencing a slow market for small cars.”
U.S. sales of the Chrysler 200 have fallen by 63 percent to 17,973 through March after the automaker dropped extensive subsidies from the sedan in December. As a result of the slowdown, workers at Sterling Heights have been idled for 12 weeks so far this year.
On Friday, FCA reported 34,268 unsold Chrysler 200s in its inventory, a 150-day supply. That was the highest days supply for any FCA vehicle except the Fiat 500 minicar, which had a 163-day supply.
CEO Sergio Marchionne and other FCA executives have said the company is actively seeking other automakers to build replacements for the 200 as well as the Dodge Dart. Both sedans have been slow-selling, thanks in part to consumer shifts away from cars and toward pickups, crossovers and SUVs.
Across the industry, U.S. car sales have slipped 5.3 percent this year while light truck deliveries have increased 11 percent, in what is shaping up to be another record year for light-vehicle volume.
Jewell said that given FCA’s plans to shift production capacity to pickups and SUVs, he believes “that the in long term this move will be a positive one for our members and the company.”
Last week at a make meeting during the National Automobile Dealers Association convention in Las Vegas, dealers were told that the 200 and Dart will change but won’t go away, and the automaker reiterated to them that it’s searching for production partners.
Sterling Heights Assembly had been slated to close in the wake of Chrysler’s 2009 bankruptcy, but the plant was purchased back from the bankrupt entity and received more than $1 billion in investment to launch the Chrysler 200 in 2014.
Last fall, FCA told the UAW during bargaining that it planned to transition Sterling Heights from a unibody plant to a body-on-frame plant so that it could build the next-generation of the Ram 1500 pickup, due in 2018. The Ram pickup would move to Sterling Heights from its historic home in Warren, Mich., about 10 miles south.
The layoffs at Sterling Heights will be the first time since Chrysler’s bankruptcy that the automaker has eliminated a shift of workers at one of its U.S. assembly plants.
Karl Brauer, senior analyst at Kelley Blue Book, said the current 200 is a dramatic improvement over the previous generation, "but it’s the right car at the wrong time."
"A couple years ago it likely could have chipped away the segment leaders’ market share," he said in an emailed statement. "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.”
