It is no new news as to how the semiconductor shortage has hit the automobile sector and there seems to be no respite from it in the immediate future. With automakers pausing production to reporting plummeting profits, the crisis has also hit the livelihoods of the workers in the automobile factories. Recently, Stellantis NV announced that it is going to lay off more than 1,600 people posted at its Belvidere, Illinois Jeep plant, as per a report by Bloomberg.
(Also read: Stellantis CEO sees chip supply crisis hitting carmakers 'hard and strong')
The automaker formed from the merger of Fiat Chrysler Automobiles NV and French rival PSA Group said that this move will be carried out by July 26 and will affect 1,671 people. According to the report, the company’s intention is to ‘balance sales with production’ of the Jeep Cherokee, which is made there. Production declines for the Jeep Cherokee SUV have been “further exacerbated by the unprecedented global microchip shortage," Stellantis said based on the report.
As demands for vehicles is seeing a rise in the US as more and more people are opting for private transportation due to the pandemic, the brand’s Cherokee hasn’t seen a major improvement in its demand. Its sale fell to 191,397 that is by 29% last year and on the other hand, the deliveries of the Jeep brand fell by 14% amid pandemic shutdowns. Stellantis’s Belvidere assembly plant has been deprived of chips as the company focused on rationing semiconductors for its most profitable vehicles. As per a data agency’s report, the factory has remained idle in February, April and May as it has been reducing production for some time now.
The company had already cut the third shift resulting in more than 1,300 job loss. It also laid off about 150 people posted at the factory in February. The automaker though had pledged in its last four-year contract with the United Auto Workers union which reach in November 2019 that it will not close any plant and will invest in it during the course of the contract.