Jeep Cherokee plant will move from operating three shifts to two shifts in Belvidere.
With demand lowering for Jeep Cherokee, the plant will be reducing one of its shifts to cut down on production and reducing costs.
The Detroit automaker has faced an unexpected increase in its iconic jeep accumulating. With sales declining in China, the company has to cut down on its sales outlook for the year.
Chrysler saw its biggest drop of 29 percent in overall sales in China.
Fiat Chrysler is loved by drivers during the warm summers when they can enjoy the free breezy air straight from the atmosphere after removing the doors and roofs. Usually, sales for these cars are brisk during the summer season, but of late, there is a decline in auto sales and there is a huge accumulation of stocks.
The Jeep Cherokee plant located at Belvidere, which is east of Rockford, will be working two shifts instead of three from May. This move will displace around 1,371 workers, due to the reduced shifts. The third shift will be removed from the Illinois plant from May.
Unless such drastic decisions are taken, the automaker will not be able to improve its profit margins.
Others in the auto industry are also following suit. Ford Motors and General Motors are making similar moves to meet slowdown in industry and lower sales.
With the increase in interest rates, production costs are increasing and making new vehicles is no longer profitable, with increasing costs.
Previously demand in the auto industry was more than supply. But now, demand has come down and there is a supply glut in the auto industry.
Employment costs are lower in China, and it is more practical to ship Cherokees from the Chinese plant instead of distributing from Illinois.
The number of cars built was 1,200 per day, last year. But currently, only 830 cars are being made.