Two giant companies are now laying off thousands in Michigan, leading state officials to offer incentives to keep unemployment down.
Stellantis and General Motors (GM) are cutting thousands of jobs in Michigan despite receiving substantial incentives from state officials aimed at preserving and expanding automotive employment.
GM announced it will lay off a total of 1,000 white-collar workers, including 634 at its Global Technical Center in Warren.
This follows Stellantis’s decision to reduce its workforce by up to 2,450 jobs at the Warren Truck Assembly plant.
These layoffs are part of a larger trend of workforce reductions by both companies in Michigan.
Stellantis’s employee count in the state has decreased by 7% over the past year, bringing its total to 38,913, while GM’s workforce has fallen by 9%, now totaling 50,316.
The job cuts highlight ongoing challenges in the automotive sector, such as Stellantis’s declining sales in the U.S. and GM’s difficulties with its electrification strategy and software issues in new pickup models.
These layoffs are part of broader initiatives to streamline operations and cut costs.
While Ford also faces industry challenges, it has distinguished itself from other Detroit automakers with an 11% increase in its Michigan workforce over the past year.
However, Ford recently announced a $1.9 billion shift in its electric vehicle (EV) strategy, which includes canceling plans for a three-row SUV and delaying the production of its next-generation electric pickup.
Mass layoffs are a common occurrence in the cyclical automotive industry, but Detroit automakers are facing increasing pressure due to rising labor costs and the need to develop affordable EVs amid falling demand.
Despite the job cuts, both Stellantis and GM have reaffirmed their commitment to Michigan.
Stellantis highlighted its long-standing presence in the state and ongoing investments in manufacturing, while GM noted its position as one of Michigan’s top employers and its recent investment in a new headquarters in downtown Detroit.
The recent layoffs are unlikely to affect the incentives provided by Michigan, as these deals are generally tied to job creation metrics, and economic development officials have mentioned that layoffs seldom lead to the recovery of funds.
Stellantis and GM are expected to seek additional state support for future projects, even as the auto industry undergoes significant changes.
Michigan officials are closely monitoring the situation and looking for ways to diversify the state’s economy beyond its heavy reliance on the automotive sector, per CBT News.
While manufacturing remains a priority, there is a growing awareness of the need to attract and develop other industries for long-term economic stability.
You can search for layoffs in your state here, or follow our layoff news for updates.
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Layoff and Unemployment Report
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%, it as seen 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 earlier this quarter: “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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