Since Monday, Fiat Chrysler has laid off roughly 2,000 employees in North America in response to the Coronavirus outbreak, a company representative told Jalopnik. The hallways of the fabled Chrysler Technical Center in Auburn Hills, Michigan—and those of FCA’s numerous other facilities around the country—are now going to be quieter. This is a somber moment for thousands, and could represent an inflection point for the auto industry at large.
“In light of the challenges created by the COVID 19 situation, and the various ‘stay at home’ orders from multiple states, a number of development projects within FCA have been temporarily put on hold,” Fiat Chrysler’s communications representative for manufacturing and labor told me via email.
“As a result of this, subcontract companies who were providing external support to a number of these projects have been asked to temporarily suspend their activities as we reprioritize certain initiatives and projects. We will continue to monitor the situation with the intent to return to normal activity as soon as the situation allows.”
Update March 25, 2020 12:10 P.M. ET: A Chrysler representative just called Jalopnik to make a few points clear. First, not all contract employees are affected by this layoff (which, the rep stated, technically is the contract house suspending the employee’s work at Chrysler, and not FCA doing a layoff, though in my view, there’s really not much of a difference). Instead, it’s the subset of contract workers called “supplemental workers” that is being affected.
“Not everybody who’s a contract worker is a supplemental worker. It’s an overarching category...There’s definitely a lot of contract workers within our enterprise, but this action is not affecting all of those people,” the company spokesperson told me, going on to say: “The action right now affects about 2,000 people.” Workers began being notified on Monday.
FCA’s rep told me the company chose to suspend work for the supplemental workers based on the priority of the projects that those workers were doing at the company.
This may not sound like a huge layoff, and indeed, that’s the entire job of a communications team: To smooth over awful events with phrases like “companies that provide external support” and “reprioritize certain initiatives and products.” In reality, my sources at Fiat Chrysler indicate that the company is laying off a significant percentage of its workers (see update above for the figures), who likely will wake up this morning wondering how they’ll support their families in a world rocked by a global pandemic that moved Fiat Chrysler to decide to shut down all of its manufacturing operations in North America.
Two FCA employees who tested positive for coronavirus have died, according to Automotive News.
One engineer, who spent multiple years at the company as a contract employee, sent Jalopnik an email describing what exactly went down last night. He says FCA is laying off all of its contract workers, though Fiat Chrysler has not confirmed this. “I was a contract Employee at FCA up until today March 24th,” the message reads. “I want to let you know that FCA has terminated all Contract positions due to the Coronavirus.” (Again, see update).
The former employee continued by describing correspondence he received from his contract house, an intermediary company between Fiat Chrysler and the employee. “My contract house is calling it a ‘pause’ in my contract but we all know what that really means.” The source concluded with his thoughts on the impetus behind the move. “It should be known that FCA is struggling with the Coronavirus and is doing everything possible to stay in the black until plants can be reopened.”
“These contract employees are not our employees. Their severance packages would be dictated by their home companies,” FCA’s communications representative told me. Between that and the “companies that provide external support” part of the official statement, you’d think the affected employees were a largely separate group from the full-time “direct” employees at the company. But that’s not how it works at Chrysler, where contract workers are Fiat Chrysler employees in every way except on paper.
They make up the very fabric of the company’s culture and expertise, sitting in the same cubicles as direct employees, eating lunch in the same disappointing Subway restaurant, rigorously testing vehicles on the same epic pre-launch validation trips, and working in the same teams to try to build the best cars possible.
At Fiat Chrysler’s technical center, where I worked as an engineer for two years, I never noticed any division between contract and direct employees. We worked harmoniously as a team, collaborating to solve the same complex problems, accessing the same company databases, and taking pride in that Fiat Chrysler logo on our badges.
Sure, contract workers’ badges were green instead of blue, their income came from a Contract House that charged Fiat Chrysler for the employee’s services, they could work overtime whereas direct employees like myself sometimes couldn’t, and they unfortunately were offered little room for promotion, but in essentially every other way, contract employees were woven into FCA’s day-to-day operations in a seamless way, and were part of the family.
Though I don’t have the numbers, I recall contract employees making up an enormous part of FCA. I asked Chrysler’s communications representative what percentage of the workforce is comprised of contract employees; the PR representative responded with “I know you’re just trying to give perspective, but we’re not elaborating beyond our statement.” I suspect that the unwillingness to provide this answer stems from the fact that this is a major layoff.
I spoke with a direct employee, who wanted to remain anonymous. They used to be a contract worker, and they have many friends with the green badge. “My department is 30 percent [contract workers]” the source told me. “This [overall layoff] number is going to be close to that...in that vicinity,” they guessed. (See update above).
“As far as I know, it’s a company-wide policy,” they continued, saying they’re certain that at least all the contract workers on the vehicle and propulsion engineering teams at FCA are affected, and continuing on to say “This is terrible. I can’t believe this.”
Sadly, at least at some level, it was understood that contract workers would always be the first to go. And indeed, that appears to be the case. That it might be the entire contract workforce is just tragic.
It’s worth mentioning that Fiat Chrysler has been making money hand-over-fist for the last half decade at least, with its Jeep and Ram brands leading the charge.
Last February the company’s CEO Mike Manley—who, per the Detroit Free press, made $14.4 million last year—was lauding the company’s workforce expansion plans. And at a fourth-quarter earnings call just last month, things seemed to be going well, with Manley saying:
North America continues to be a standout for the group, achieving record results for the fifth consecutive year, with adjusted EBIT of EUR6.7 billion and a margin of 9.1%. Ram reached new U.S. sales record in 2019 and for the first time became the Number Two ranked brand for U.S. sales in the highly profitable large pickup truck segment, reflecting the strength of the Ram brand and consumer passion for our truck lineup.
The third-quarter results also sounded great, with the Detroit News writing in October “Fiat Chrysler posts record North America earnings, margins in Q3.” Now, just a couple of weeks into a global health crisis, it’s mass layoffs.
This story has been updated