Belvidere Assembly Plant, which has seen its workforce shrink by 70% over the past three years amid the backlog of Jeep Cherokee sales, is waiting for another round of layoffs in May.
Stellantis announced this week that it plans to eliminate a secret number of jobs at the hard-hit car factory near Rockford, which has been in operation during the ongoing semiconductor shortage, and drastically reduce its workforce in the process.
The extensive plant has been reduced from more than 5,000 workers to about 1,600 through a series of layoffs since 2019. The staff cuts planned for May would allow the carmaker to “operate the plant in a more sustainable way,” said Stellanti spokeswoman Jodi Tinson in a statement on Tuesday.
“The reductions will be achieved through a combination of retirement packages offered to eligible UAW-represented employees as well as layoffs of both hourly and salaried employees,” Tinson said. “The Company notified affected employees, the State of Illinois, the City of Belvidere and the UAW on March 28 that redundancies could begin as early as May 27, 2022, with retirements taking effect on May 31, 2022.”
Stellantis declined to reveal the number of positions it plans to eliminate.
The Belvidere factory became the exclusive home for the Jeep Cherokee 2017. The region’s largest employer at its zenith, the factory had 5,464 three-shift workers in early 2019, after building 270,000 SUVs last year. But the factory has dramatically reduced its workforce since then, reducing jobs and eliminating two shifts as demand for Cherokee declined.
Last year, Jeep Cherokee sales fell 34% to 89,126 vehicles, according to Stellantis.
The first cut was the deepest with almost 1,400 workers reducing their jobs in 2019 when the factory eliminated its third shift, a harbinger of more difficult days ahead.
Last year, the facility was mostly closed from March to October due to the semiconductor shortage. When production resumed in November, the plant in Belvidere was reduced to one shift and about 2,100 employees.
Stellantis announced in November that it planned to lay off another 400 hourly workers starting in January, due to declining Cherokee demand and the ongoing semiconductor shortage, which has disrupted production in the automotive industry.
This year, the factory in Belvidere was down by almost 40% of the time during the first quarter, including no later than the weeks of March 7 and March 14. It resumed production on March 21 with about 1,600 workers, Tinson said.
Production disruptions continue to plague the automotive industry as the global semiconductor shortage enters its second year, with shutdowns at Ford’s Chicago Assembly Plant and production problems at the incipient Rivian EV plant in Normal also blaming the chip shortage.
The Ford plant on the southeast side of the city, which manufactures the SUVs Ford Explorer, Lincoln Aviator and Police Interceptor, is currently at full capacity, but has more than a thousand new vehicles parked at Chicagoland Speedway in Joliet, waiting for chips before being delivered to reseller.
“We have some vehicles parked at the speedway and are waiting for parts due to the semiconductor shortage,” Ford spokeswoman Kelli Felker said in an email. “We work closely with our suppliers to address these production constraints and will ship the finished vehicles as soon as we can.”
Edmunds estimates that approximately 3.3 million new cars will be sold in the US during the first quarter of 2022, a decrease of 15.2% compared with the previous year, largely due to disruptions in the supply chain.
But the car buying website said that 41% of new vehicles sold within the first week after arriving at a dealership, up from 20% last year, showing that demand remains strong – despite rising petrol prices.
“Sky-high gasoline prices were the focus of consumers in March, but the lack of inventory is what ultimately pushed down sales of new vehicles in the first quarter,” Jessica Caldwell, Edmunds’ chief executive officer, said in a news release on Wednesday.
Stellantis, which was created by the merger of Fiat Chrysler and Peugeot from France in January 2021, is expected to see a sales decrease of 10.7% compared to the previous year during the first quarter, Edmunds said.
The Belvidere factory opened under the Chrysler banner in 1965, with a white Plymouth Fury II sedan as the first vehicle to roll off the line. Over the years, the facility has been redesigned several times and done everything from Dodge Neon to Chrysler New Yorker.
During Chrysler’s bankruptcy in 2009, the factory was down to 200 employees before Fiat and a government rescue operation saved it and the company.
The factory seemed to be getting started with the arrival of the Jeep Cherokee 2017, the sweet spot in an automotive industry where SUVs have replaced cars in many family garages. But it’s mostly gone downhill for Cherokee, and the facility, over the past three years.
While the facility continues to shrink, at least one industry analyst believes Belvidere may find new life at the center of the automaker’s plan to convert 40% of its U.S. production to electric vehicles by 2030.
Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, a Pennsylvania-based research firm, said Stellantis could rebuild the Belvidere plant and begin building electric cars there by 2024, while moving Cherokee production to another plant outside Illinois.
Stellantis declined to comment Wednesday on “rumors or speculation” about the future of the Belvidere plant.