A massive company is now laying off thousands in Michigan after grappling with declining sales and bloated inventories, sources report.
Stellantis NV is scaling back production and temporarily laying off workers at two major U.S. plants, including one in Michigan.
Stellantis announced it will reduce a shift at its Warren Truck Assembly Plant “to align with production and sales.”
The company said about 1,600 of the 3,300 employees will be impacted by the temporary layoffs.
The plant produces the Jeep Wagoneer, Wagoneer L, Grand Wagoneer and the Ram 1500 Classic.
“Stellantis is adjusting the operating pattern at its Warren Truck Assembly Plant to align production with sales.
The plant will run one shift for the month of July.
The Company will continue to monitor demand and take the necessary action to balance inventories,” spokesperson Jodi Tinson said in a statement.
It was announced in April that the automaker was planning to lay off workers in the U.S. to cope with a rapidly changing auto market after it faced increased capital spending in making the transition from gasoline vehicles to electric autos.
It also reported declining sales in the first quarter and higher costs due to a new contract agreement reached last year with the United Auto Workers union.
Stellantis reported on Tuesday a 21% decrease in total U.S. sales for the second quarter, selling 344,993 vehicles.
Despite the drop in sales, the company said it saw a 4% increase in sales in the second quarter compared to the first quarter.
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Other Economy News Today
Applications for unemployment benefits now surge to new highs, a sign that the white-hot labor market is starting to cool off.
First-time applications for unemployment benefits rose last week to 231,000, the highest level since August, per CNN.
Thursday’s data also showed that the number of continuing claims, or applications from people who have filed for unemployment for at least one week, was 1.78 million.
That’s an increase of 17,000 from the prior week, according to the Bureau of Labor Statistics.
The latest numbers come less than a week after the monthly jobs report showed the US economy added just 175,000 positions in April, less than economists expected and a steep drop-off from prior months.
US employers have now added an average of 245,500 jobs per month, versus 2023’s 251,000-per-month average.
Still, hiring remains strong. Although the unemployment rate ticked up to 3.9% last month, it’s the 27th consecutive month that the jobless rate has held under 4%, matching a streak last seen in the late 1960s.
Weekly jobless claims data tends to be volatile but, while one week’s worth of data “does not a trend make,” said Chris Rupkey, chief economist at Fwdbonds.
“We can no longer be sure that calm seas lie ahead for the US economy if today’s weekly jobless claims are any indication.”
“Company layoffs are picking up, hinting at caution on the part of companies as they weigh the outlook for the second half of the year,” he wrote in a note Thursday.
The Federal Reserve has been battling inflation by raising its key lending rate in the hopes of slowing the economy.
While the labor market has so far resisted those efforts, remaining white hot for the past 18 months despite 11 rate hikes from the central bank, Fed Chair Jerome Powell said last week that demand has “cooled from its extremely high level of a couple of years ago.”
Ian Shepherdson at Pantheon Economics said in a note Thursday: “We’d need to see at least a month of elevated readings to convince us that the trend really has turned.”
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Also Read: A Giant Company Now Announces Unexpected Layoffs in Virginia
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