Stellantis NV said it’s cutting more than 1,600 jobs at its Illinois Jeep plant, a sign the deepening chip shortage that has idled auto plants is now doing more lasting damage.
The automaker formed from the merger of Fiat Chrysler Automobiles NV and French rival PSA Group said it will cut the second shift at its Belvidere plant by July 26, affecting as many as 1,671 people.
The move is intended to “balance sales with production” of the Jeep Cherokee, which is made there, the company said Friday in an emailed statement.
Production declines for the Jeep Cherokee SUV have been “further exacerbated by the unprecedented global microchip shortage,” Stellantis said.
While demand for vehicles has been outstripping supply as the U.S. emerges from pandemic lockdowns and people opt for private transportation, the Cherokee hasn’t been a major beneficiary.
Sales tumbled 29% last year to 191,397, while deliveries at the Jeep brand fell 14% amid pandemic shutdowns.
The Belvidere assembly plant has been starved of chips during the crisis as Stellantis looked to ration semiconductors for its most profitable vehicles.
The plant has been idled in February, April and May, according to researcher AutoForecast Solutions.
It has also been cutting production for a while: The company cut the third shift, affecting more than 1,300 jobs, in February 2019. It laid off 150 people at the plant in February.
Stellantis pledged in its last four-year contract with the United Auto workers union, reached in November 2019, not to close the factory during the life of the contract, and to invest in it.