This story has been updated with additional information.
For Charles, the news that he was going to be out of work came unexpectedly, and in an unexpected way. The long-time Fiat Chrysler Automobiles contractor was in the middle of a teleconference on Tuesday when the line suddenly went dead. His access to the call had been cut off.
After spending an hour trying to connect with a supervisor, he was told to dial into a different call, “and that’s where we found out we were being let go,” said the auto industry veteran, asking not to be identified by his full name since he still hopes to eventually be brought back to work.
Charles was one of about 2,000 FCA contract workers who were let go this week as the smallest of the Detroit automakers put numerous projects on hold. Like virtually the entire auto industry, its factories have been idled and its full-time workforce sent home as the country deals with the worsening coronavirus pandemic.
“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,” FCA said in a statement. “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 re-prioritize certain initiatives and projects.”
The automaker did hold out a little bit of hope for the 2,000 contractors, noting in its statement that, “We will continue to monitor the situation with the intent to return to normal activity as soon as the situation allows.”
However, another contract employee who was let go and asked not to be identified said that there was not a high level of expectation that everyone would be brought back.
In part, because of the financial impact the company will take because of the pandemic, but also because the pending merger with PSA may render some of those jobs redundant.
The auto industry has long been dependent upon contractors to assist it in a wide variety of operations. That includes designers, engineers and marketing specialists who supplement full-time staff at a corporate level, as well as those who fill in gaps on the assembly line.
Typically, contractors receive lower levels of pay and benefits compared to full-time staff and, Charles stressed, the cuts at FCA “make you realize there is no security as a contract worker. This can happen at any time.”
The issue of contract work became one of the sticking points during last year’s negotiations between General Motors and the United Auto Workers. After a lengthy strike, GM agreed to provide contractors on the factory level a path to full-time employment. That provision was largely copied in the settlements Ford and FCA later reached with the UAW. But it covered only those who would fall into the blue-collar category.
All told, FCA released about two-thirds of its North American subcontractors. It remains unclear what recourse they will have to replace their income and benefits. It may depend upon individual state regulations and how the automaker lists their status.
“We are not taking the same action as FCA,” a GM spokesman told TheDetroitBureau.com when asked if his company would also cut contractors.
Ford has yet to respond to several requests for comment, but CEO Jim Hakett signaled job cuts could be in its future. In an e-mail to employees on Thursday morning, the chief executive noted steps the company is taking to save cash at a time when its factories are closed and U.S. car sales have collapsed. But he also said, “Candidly, though, we need to do much more given the sharp drop-off in demand for new vehicles and the shutdown of our plants worldwide.”
Specific plans to trim jobs were not mentioned in Hackett’s note to employees.