Jeep maker blames California for job cuts in their Midwest plants

[Leroy N. Soetoro]

https://www.mercurynews.com/2023/12/08/stellantis-blames-job-cuts-at-jeep-
plants-on-california-emissions-rules/

Stellantis NV is eliminating a shift at a Jeep plant in Detroit and
cutting jobs at its Toledo, Ohio, Jeep assembly complex, a move the
company blamed on strict emissions standards adopted by California and
more than a dozen other states in 2019.

Stellantis announced Thursday it will temporarily cut a shift at its Mack
Avenue plant in Detroit, which makes two- and three-row Jeep Grand
Cherokee sport utility vehicles and hybrids, and trim jobs in Toledo,
which produces the Wrangler SUV and Jeep Gladiator pickup.

Stellantis said it was cutting Jeep production in anticipation of
potentially lower sales of gas-powered vehicles in California and other
states. The company filed a petition against California regulators
Wednesday arguing the state’s rules put the company at a disadvantage
versus competitors.

The moves come as automakers are pushing back on the Biden
administration’s efforts to increase fuel economy and spur faster adoption
of electric vehicles. Automobile industry trade groups have said stricter
rules would cost them billions in fines, while dealers warn that EV demand
is softening.

Stellantis’ predecessor, Fiat Chrysler Automobiles NV, sided with the
Trump administration it its fight to take away California’s legal right to
set its own emissions standards. That position resulted in it being left
out of the less stringent deal the California Air Resources Board, or
CARB, struck with four carmakers — Ford Motor Co., Volkswagen AG, Honda
Motor Co. and BMW AG.

Layoff Notices

Stellantis said it would file notices Thursday to state and local
governments under the federal WARN Act, which requires employers with 100
or more workers give 60 days’ notice of plant closings or mass layoffs.
The company declined to specify how many jobs would be affected; the two
plants combined employ just over 10,000 people.

Stellantis’s Wednesday petition alleged that California improperly adopted
a 2019 deal negotiated by state regulators and four carmakers that allowed
those manufacturers to voluntarily increase the average fuel economy of
their fleets to about 50 miles per gallon (80 kilometers) by the end of
the 2026 model year.

While Stellantis has lagged behind other automakers in the conversion to
EVs, its Jeep Wrangler 4xe hybrid is the fourth best-selling electrified
vehicle in California this year through September, and its Chrysler
Pacifica hybrid is 13th on the list.

At the same time, all three big Detroit automakers are looking to cuts
costs after they agreed to contracts with record pay increases following
the United Auto Workers’ strikes this year.

Lys Mendez, communications director for CARB, said the agency expects
California’s Office of Administrative Law would recognize the agreements
with the carmakers “for the settlements that they are” and dismiss
Stellantis’ petition. The UAW did not immediately respond to a request for
comment.

Sales Slump

Stellantis is also wrestling with shrinking sales at its prized Jeep brand
as high interest rates put its premium SUV out of reach for more
consumers.
Jeep brand sales fell 4% in the third quarter, the ninth consecutive
quarterly decline, Stellantis reported in October. Sales were down 9% this
year through September. Jeep named a new head of North America and picked
a new global brand head last month.

The 2019 emission deal between California and the four carmakers is widely
seen as a model for a subsequent Biden administration rule adopted in
2022. That rule now requires carmakers to increase their average fuel
economy to about 49 miles per gallon by 2026.

Despite the fact that the national rules will require roughly the same
fuel economy as California’s standards, Stellantis says manufacturers in
the 2019 deal can meet the standards based on their nationwide sales,
while excluded automakers are measured by sales in the states that follow
the California rules. This, a company spokesperson said, necessitated the
moves announced on Thursday.

More stories like this are available on bloomberg.com


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