Jeep layoffs blamed by Stellantis on California emissions regulations

09 December 2023

Stellantis, the parent company of Jeep, has announced a significant wave of layoffs at its Jeep plants in Detroit and Toledo, Ohio, leaving thousands of workers in a state of uncertainty. The blame for this downsizing has been placed squarely on California's stringent emissions regulations, which the company asserts have put it at a considerable competitive disadvantage.

In a major shake-up, Stellantis has indicated that it plans to cut approximately 2,455 jobs at its Detroit plant, where it manufactures the Jeep Grand Cherokee, and another 1,225 positions at its Toledo facility, responsible for producing the Jeep Wrangler and Gladiator. This announcement, as reported by The Detroit News, has come as a harsh blow to the affected workers and their communities, with the layoffs set to take effect as early as February 5.

To adapt to the dwindling sales of Jeep vehicles, Stellantis is making operational changes at these plants. The Toledo facility, which currently operates on an alternative work schedule, will transition to a traditional two-shift operation. Simultaneously, the Detroit plant, employing 4,600 workers, will reduce its shifts from three to two. The grim reality of job losses hangs over these operations, raising questions about the impact of California's emissions regulations on the wider automotive industry.

The automotive giant's decision to cut jobs is closely linked to its resistance to President Biden's initiatives aimed at reducing carbon emissions and promoting electric vehicles. Stellantis argues that adhering to strict regulations could potentially lead to billions of dollars in fines for the company, a claim that has sparked a contentious debate within the industry.

Stellantis is already limiting vehicle shipments to dealerships in states that have adopted the California Air Resources Board (CARB) rules, which are more stringent than national standards. In these CARB states, dealerships predominantly stock plug-in hybrid SUVs, while all-electric or ICE (Internal Combustion Engine) models must be special ordered. Conversely, in states not adhering to CARB standards, dealerships tend to have limited or no hybrids in stock, focusing instead on ICE vehicles.

The rationale behind these maneuvers lies in CARB states requiring manufacturers to sell a specific percentage of zero-emission vehicles and plug-in hybrids, compelling Stellantis to prioritize these markets. However, a key point of contention arises from the fact that in 2020, major automakers like Ford, Honda, Volkswagen, and BMW reached a unique agreement with California. Under this agreement, compliance is measured on a national scale, not solely in CARB states. Stellantis argues that this places the company at a disadvantage, as the national numbers are easier to achieve.

Stellantis's attempt to join the pact with California was met with rejection, sparking further controversy. The company claims that it is being penalized for its public questioning, along with other automakers including General Motors and Toyota, of California's authority to establish its own emissions regulations back in 2019.

While Stellantis has been relatively slow in transitioning to EVs in the US, it has invested billions in these efforts. Vehicles like the Jeep Wrangler 4xe and Chrysler Pacifica hybrids have achieved substantial sales success in California. However, the company has faced challenges, including a recent recall of over 32,000 vehicles due to fire risks and declining sales of ICE Jeep models, exacerbated by high interest rates. These factors have compelled Stellantis to initiate substantial cost-cutting measures, affecting the livelihoods of thousands of workers.

This isn't the first time Stellantis has cited the shift to EVs as the reason for layoffs. Earlier this year, the company laid off approximately 1,350 workers at its Illinois plant for similar reasons. The timing of these layoffs coincides with the broader landscape in the American automobile industry. The "Big Three" in Detroit, comprising General Motors, the Ford Motor Company, and Chrysler (owned by Stellantis), are also exploring ways to cut costs as they grapple with "record" pay increases following strikes by the United Auto Workers.

Via