Stellantis (STLA) announced plans to cut a manufacturing shift and lay off around 1,100 workers at an Ohio plant producing the Jeep Gladiator pickup.

The announcement by the Big Three automaker is driving shares up 2% in premarket trading Thursday.

The company, which is struggling with excess inventory and competition from Chinese rivals, recently reported a plunge in third-quarter sales and issued a profit warning. It had also said that its inventory buildup had contributed to a 36% decline in North American shipments.

The company, which also houses the Chrysler brand, said it would indefinitely lay off the around 1,100 workers, as it moves to one shift from two at its Toledo South assembly plant, whose sole product is the Jeep Gladiator pickup. 

Stellantis Layoffs Part of Move to Realign US Operations

“As Stellantis navigates a transitional year, the focus is on realigning its U.S. operations to ensure a strong start to 2025, which includes taking the difficult but necessary action to reduce high inventory levels by managing production to meet sales,” the company said in a statement to Investopedia.

“These are difficult actions to take, but they are necessary to enable the company to regain its competitive edge and eventually return production to prior levels," it added.

Stellantis said affected members of the United Auto Workers union that are laid off will get one year of supplemental unemployment benefits (SUB) as well as eligible state unemployment benefits, translating to 74% of their pay, followed by one year of transition assistance. They will also continue to get healthcare coverage for two years.

The layoffs will be effective as early as Jan. 5, the company said.

Stellantis shares have lost 40% of their value this year.