Fiat Chrysler Ends Production of Chrysler 200, Plans to Focus on Trucks

Most plant workers are or will be on temporary layoffs as plant undergoes retooling

Fiat Chrysler Ends Production of Chrysler 200, Plans to Focus on Trucks
Image: FCA Group
December 6, 2016

Fiat Chrysler (FCA) has ended production of the Chrysler 200, a vehicle that once saved a Detroit plant from closing as well as introducing the company's popular tagline "Imported from Detroit."

The Detroit News (DN) reports that December 2 was the last day of production for the midsize sedan at the plant located in Sterling Heights. The majority of the approximately 1,700 hourly employees still working there after the elimination of a shift in July either are on temporary layoffs or will be as FCA retools the plant to focus on building the next generation of the Ram 1500 truck. It is expected that this reorganization will take a large part of 2017.

According to Yahoo!News (YN), the 200's sales took a dramatic hit during 2016, falling 65 percent from 2015. Fewer than 55,000 were sold in November. Although nearly every automaker has seen a drop in sedan sales, the decrease in sales of the 200 has been one of the most drastic.

FCA tried to find a partner to continue producing the sedan, but in the end it was unable to reach an agreement with any manufacturer.

It was in July when the company first announced its plans for a December end to production of the 200, says DN, though it did not provide an exact date at that time. Jodi Tinson, FCA spokeswoman, confirmed the end of the vehicle's production but stressed the company's claim that production of the trucks will lead to more jobs being added to Sterling Heights overall.

FCA informed state officials earlier this year that it expected to add 700 new jobs once the plant begins production of the Ram. These jobs are one part of its plans to invest $1.48 billion in the plant for production of the truck as well as enhancements such as the renovation of a paint shop and a test track.

The officials—who granted millions of dollars in incentives to the company—have said that FCA will employ a base of 4,600 people at the Sterling Heights plant even before the new hires take place, a significant increase from the almost 1,900—including salaried workers—employed there as of July. YN reports that a base of 4,500 workers will be employed.

Tinson told DN that the company is not confirming the total workforce expected at the plant at this time because "it is too soon to confirm what total employment will be at SHAP [Sterling Heights Assembly Plant] at full production."

It is probable that the numbers of both new and retained jobs at the plant will be determined by either the number of workers who come from the Ram plant in Warren—where the pickup is currently built—or if a third shift is added.

Those employees who are temporarily laid-off are eligible to receive a combination of State Unemployment Insurance and Supplemental Unemployment Benefits (SUB), which are paid by FCA. When the benefit of 20 weeks of state-paid State Unemployment Insurance runs out, the company will pay the full cost of the workers' unemployment benefits. Since the layoff falls into the temporary classification, employees are entitled to receive SUB as long as it lasts.

"Our goal from the beginning was to work with FCA-US to make sure that all of our SHAP members are trained and working to minimize any loss of income during the product transition," stated UAW Vice President Norwood Jewell. "We are working hard to achieve that goal."

Benefits are expected to equal approximately 70 percent of the employees' take-home pay.

The company says that there are some workers—mostly those in skilled trades—who will not lose their jobs because they will be needed for the retooling process. Indefinitely laid-off employees are to be put into open full-time positions in other plants "as they become available within the Detroit labor market based on seniority."

The retooling process has already begun, said Tinson: "We are not providing specific time lines, but it is obviously a much more involved process to convert a plant from car to truck production."

The company has not announced a date for when it expects production of the Ram to begin. However, CEO Sergio Marchionne said in May that the new truck is expected to go on sale by January 2018. He also said that, at the same time as the Sterling Heights plant produces the new generation of trucks, the Warren plant will continue building the current generation of the Ram 1500 for some time before it will "embrace the new architecture for the Grand Cherokee and the Grand Wagoneer," which is expected at some point in 2018 or later.

Simultaneous production of both generations of the Ram truck may help FCA build more pickup trucks for its fleet business without affecting the new trucks' residual values.

The assembly plants in Sterling Heights and Warren, together with supporting stamping plants, employ more than 9,500 people for Fiat Chrysler.