April 6, 2016 / 5:12 PM / 2 years ago

Fiat Chrysler cuts 1,300 workers in Michigan, scraps shift

DETROIT (Reuters) - Fiat Chrysler Automobiles (FCAU.N) (FCHA.MI) said on Wednesday it is laying off about 1,300 workers indefinitely and ending one of the two shifts at its Sterling Heights, Michigan plant that makes the slow-selling midsize Chrysler 200 sedan.

A new Fiat Chrysler Automobiles sign is pictured after being unveiled at Chrysler Group World Headquarters in Auburn Hills, Michigan in this May 6, 2014 file photo. REUTERS/Rebecca Cook

U.S. sales of the Chrysler 200 were down 63 percent in the first three months of this year from a year earlier, as FCA has de-emphasized sales of the model which had been often sold to rental agencies.

The lay offs will be effective July 5.

The company did not say how long it would continue to make the Chrysler 200. In January, Fiat Chrysler Automobiles (FCA) Chief Executive Sergio Marchionne said the company would cease making the midsize sedan as well as the compact Dodge Dart, unless a partner could be found to keep the production going.

United Auto Workers Vice President Norwood Jewell said in a statement that the move was not unexpected, and expressed optimism that FCA will find jobs for the workers by making more trucks and SUVs.

“FCA is not the only company experiencing a slow market for small cars,” Jewell said. “On a bright note, there is a strong demand for larger-sized vehicles. The company has been planning to increase its capacity to build more trucks and SUVs. I believe that in the long term this move will be a positive one for our members and the company.”

It is one of the largest layoffs at a U.S. auto plant since the 2008-2009 recession, and there is widespread speculation that it will not be the end of production changes among U.S. automakers trying to adjust to consumer tastes that continue to shift from cars such as sedans and hatchbacks to SUVs and pickup trucks.

Workers at the Sterling Heights plant in suburban Detroit will return to work this coming Monday after a 10-week shutdown called to match consumer demand with production, the company said.

In 2015, passenger cars accounted for 44 percent of sales in the U.S. automotive market, down from 48 percent in 2014. The last year cars outsold SUVs and trucks in the U.S. market was 2012, when 51 percent of new vehicles sold were cars, according to industry consultant Autodata Corp.

General Motors Co (GM.N) and Ford Motor Co (F.N) in the past year have adjusted to the shift in the U.S. auto market, cutting jobs and production for some models while adding to those of others.

Reporting by Bernie Woodall; Editing by Phil Berlowitz and Alistair Bell

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