Illinois Jeep Cherokee Factory to Cut Over 1,600 Jobs Amid Global Chip Shortage

Illinois Jeep Cherokee Factory to Cut Over 1,600 Jobs Amid Global Chip Shortage
Jeep Cherokees sit on a lot at Fiat Chryslers's Belvidere Assembly Plant in Belvidere, Ill., on Feb. 27, 2019. (Scott Olson/Getty Images)

A Jeep Cherokee factory in Northern Illinois is cutting more than 1,600 jobs as multiple auto manufacturers are experiencing shortages in microchips.

The U.S. arm of Stellantis announced it will cut workers in one of its two shifts at the Stellantis Belvidere Assembly Plant in Boone County by July 26, The Associated Press reported.

France’s PSA Group and Fiat Chrysler merged earlier this year and announced a new company, Stellantis NV—now the world’s fourth-largest automaker by volume. The company also owns Jeep, as well as more than a dozen other passenger-car brands.

The company’s move will result in 1,641 workers getting permanently laid off, said Jodi Tinson, a Jeep Cherokee spokesperson.

“The Company will make every effort to place laid-off hourly employees in open full-time positions as they become available based on seniority,” Tinson said in a statement to The Detroit News.

The layoffs are intended to “balance sales with production” as the situation at the company has been “further exacerbated by the unprecedented global microchip shortage,” the spokesperson explained.

Jeep Cherokee has become the latest car brand highlighting the intensifying semiconductors shortage that is affecting the global auto industry.

Jaguar Land Rover, General Motors (GM), and Ford, also announced last month they will be suspending some of their production at several plants in the United States and the United Kingdom.

2020 Chevrolet Silverado
A new 2020 Chevrolet Silverado HD is shown on the assembly line at the General Motors Flint Assembly Plant in Flint, Mich., on Feb. 5, 2019. (Bill Pugliano/Getty Images)

Ford said in early May the microchip shortage might slash second-quarter production by half, costing it about $2.5 billion and about 1.1 million units of lost production in 2021.

Other auto brands that have been hit hard by the semiconductor shortages are Volkswagen, Nissan, and Honda. The shortfall deepened after a plant owned by Japan’s Renesas caught fire in April.

The U.S. Commerce Department has earlier this month pressed Taiwan Semiconductor Manufacturing Co Ltd and other Taiwanese firms to prioritize the needs of U.S. automakers to ease chip shortages in the near term, Commerce Secretary Gina Raimondo said.

Raimondo told a Council of the Americas event on May 4 that longer-term, increased investment was needed to produce more semiconductors in the United States and that other critical supply chains needed re-shoring, including to allied countries.

“We’re working hard to see if we can get the Taiwanese and TSMC, which is a big company there, to, you know, prioritize the needs of our auto companies since there’s so many American jobs on the line,” Raimondo said.

Reuters contributed to this report.

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