Around 1,650 local Stellantis workers are now on furlough after the company pulled back on production of 8-speed transmissions earlier this week due to the ongoing microchip shortage.
Around 1,000 employees who build 9-speed transmissions were temporarily laid off in April and were scheduled to return to work on May 17. Now, those furloughs have been extended three more weeks.
At the same time, one shift building 8-speed transmissions at the Kokomo Transmission Plant has also been furloughed until June 14, according to Chris Steward, vice president of United Auto Workers Local 685, which oversees the plants in Kokomo and Tipton.
He said there are two other shifts building 8-speeds still operating at the plant.
The furloughs on the 8-speed line mark a sharp pivot from earlier this year when Stellantis was asking employees to work overtime to produce the transmissions. In February, employees on that line were working Saturdays, and could also volunteer to work Sunday shifts.
The three-week extension of the furloughs on the 9-speed line is the third time this year the company has prolonged temporary layoffs for local workers.
Around 1,800 workers were initially furloughed for the first two weeks of February, which were then extended by two weeks for most employees.
UAW Local 685 President Matt Jarvis said in a previous interview the prospect of furloughs is something workers will have to adapt to as the chip shortage drags on.
“It’s something we’re dealing with,” he said. “I think this is going to be our new normal through the end of the year.”
The furloughs have been brought on by the pandemic-fueled chip shortage, which started when consumer demand soared for more vehicles as people looked to avoid using public transportation. Demand also spiked for devices such as smartphones and gaming consoles that people use for entertainment while stuck at home.
The chips, also called semiconductors, have become part of the backbone of the auto industry, controlling nearly all electronic features inside a vehicle.
For months now, the shortage has forcefully disrupted the automotive industry, with most companies scrambling to realign their production as they wait for more chips to arrive. Dealerships are also working with reduced inventory as fewer vehicles are being produced.
The shortage is not confined to North America and Europe, as automakers in China are also experiencing delays in production even as the consumer auto market continues to pick up momentum, autoweek.com reported.
“While a number of semiconductor producers have indicated they would work to boost production capacity, the results are still expected to be months away, painting a dire picture for the industry over the next several months as car sales themselves recover ahead of summer,” the auto news site said.