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Chrysler Group LLC has temporarily scaled back production of the new Jeep Cherokee, laying off about 500 employees, the company confirmed early today.
"We have been producing vehicles since the end of June and have now built the critical number of vehicles we need to stock dealerships once containment is released," the company said in a statement. "We will temporarily idle the second shift so as not to put additional strain on our logistics partners to get these vehicles into the hands of customers as quickly and efficiently as possible upon release."
The company said the layoffs were expected to last about two weeks.
Bruce Baumhower, the president of United Auto Workers Local 12, told reporters today that the shutdown and layoffs were expected to last one week as employees do final checks on the vehicles before releasing them to dealers.
Production of the 2014 Cherokee began June 24, but no vehicles have been shipped to dealerships yet. Chrysler brought on the second shift Aug. 19. Each shift is able to build about 400 vehicles per day.
In late July, Chrysler Group Chief Executive Officer Sergio Marchionne said the automaker was working on some last-minute tweaks to ensure the new nine-speed transmission functioned properly. Mr. Marchionne said early-build vehicles would have to be recalibrated.
The company wouldn’t say if it is still in the process of reprogramming those Jeeps.
A Chrysler spokesman said the company is doing extended quality validation testing but declined to elaborate.
Mr. Baumhower said the Cherokee is essentially ready for buyers, but that Chrysler is being extra-cautious on a complex launch.
"There's not a problem with the vehicle,” he said. “The unusual thing on this launch, you've got a brand-new engine. It's never been used before. You've got a brand-new nine-speed transmission. You've got a brand-new torque converter. We're putting all those three things together and we want to make sure we get it perfect before they get released to the dealers."
Mr. Baumhower said employees — including some from the afternoon shift who were not laid off — have been doing lengthy test drives of the new Cherokees.
“It's a two-hour ride in the car to make sure everything's perfect [so] when it gets to the consumer they're delighted with the vehicle,” he said.
The company still says the 2014 Cherokees will be in dealerships by the end of this month. Union officials say the vehicles will begin being released to dealers next week.
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