Fiat Chrysler Automobiles to cut 1,300 jobs at Michigan factory

Fiat Chrysler Automobiles NV is set to cut 1,300 jobs this summer at the Michigan factory where it assembles a small Chrysler sedan, in its first large-scale cutback since 2009. The move comes after a sharp decline in demand for cars.

Such large-scale cuts, were at one time a common practice among Detroit's one-time Big Three. They are now rare in the backdrop of the recent strong annual industry sales gains and cleaner balance sheets at General Motors Co, Ford Motor Co and Fiat Chrysler.

According to commentators, the move would speed up chief executive Sergio Marchionne's shift of emphasis on trucks and SUVs from small-car production in the US. He had allocated $1 billion to adjust its US manufacturing to the changes. The Sterling Heights, Michigan plant that would lose the workers was expected to be revamped to build a pickup truck or SUV. Details of the model, however, were not disclosed.

The news spells a setback to Fiat Chrysler and the United Auto Workers (UAW) union, which had used the auto maker's recovery since its 2009 bankruptcy to bolster its images. According to Fiat Chrysler, it had hired 11,000 Detroit-area workers since its bankruptcy and posted 72 consecutive months of year-over-year sales increases.

Fiat Chrysler informed the UAW, city and state officials of the layoffs last afternoon. The indefinite layoffs would start 5 July. About 1,900 employees would continue to work in one shift at the assembly plant.

The decision follows months of temporary layoffs due to a lack of demand for Chrysler's midsize sedan, the facility's only vehicle. In a crowded market segment with declining demand, the vehicle failed to gain traction and would be discontinued. According to Fiat Chrysler, the shift cut was ''to better align production with demand.''

''Our truck and SUV plants are running six days a week about 20 hours a day,'' the company said. ''And while 1,300 people will be impacted by layoffs (at Sterling Heights Assembly), we have been able to add 11,000 hourly jobs in Michigan since 2009 to keep up with that demand.''