Stellantis NV is asking its more than 33,500 hourly and salaried employees to consider in the coming weeks the voluntary acquisition announced Wednesday by SUV maker Jeep and pickup truck Ram, a response to an increasingly competitive automotive market and costly shift to electrification.
The automaker declined to provide reduction targets for both its contract and noncontract workforce, but spokeswoman Jodi Tinson said the company will make the packages available to 31,000 hourly workers in the US and Canada and 2,500 US employees. . In a statement, United Auto Workers President Shawn Fain called the proposed cuts “disgusting.”
A letter from a local United Auto Workers president circulated earlier this week on Facebook suggested the company is seeking to slash its hourly workforce by as many as 3,500 employees in response to stiff market competition and a costly transition. ‘electrification.
Realizing a cleaner energy future is proving to be a tricky business: Stellantis follows General Motors Co. and Ford Motor Co. in offering acquisitions to reduce costs and achieve greater financial flexibility. The moves come amid a particularly tense year of contract negotiations with the UAW and amid looming fears of a recession.
Stellantis CEO Carlos Tavares said electric vehicles are 40 percent more expensive to produce than their gas and diesel-powered counterparts. The company must absorb those costs, he says, to avoid a price hike on customers that would further shrink the market and risk more jobs.
Workers eligible for UAW-agreed buyouts are expected to receive an offer letter starting next week. If open positions result from departures, they could present opportunities for workers made redundant to enter those jobs and for additional part-time workers to move into full-time roles. Stellantis employs approximately 43,000 hourly workers and 13,000 employees in the United States and 8,000 hourly employees in Canada.
Stellantis has made “solid progress” on its Dare Forward 2030 strategy, which includes doubling global revenues and launching 25 all-electric vehicles for the U.S. market, said Mark Stewart, chief operating officer of Stellantis NV in North America. an email to employees obtained from the Detroit News. The automaker’s operations reviews found more room for improvement in overall efficiency.
“We know investment decisions in Stellantis are based on many key factors, starting with market conditions, quality and processing costs,” he said. “As a team, we must continue to identify efficiencies to make our operations more competitive both inside and outside the company. Competition is fierce and the cost of electrification cannot be passed on to the customer. Make no mistake, we intend to win the market».
There’s a lot at stake in this transition, according to experts, and newly elected UAW leaders say they are determined to ensure it doesn’t become a race to the bottom as their employers rake in billions of dollars. Stellantis reported $18 billion in profit globally in 2022 with $14.9 billion in adjusted operating profit from North America. Its U.S. sales in the first quarter of 2023, however, were down 9%. The automaker will share first-quarter shipments and revenue on May 3.
Stellantis’ drive to slash thousands of jobs while raking in billions in profits is disgusting,” UAW’s Fain said in his statement, echoing remarks shared last week about his “fractured” relationship with Stellantis and during the special contract last month. a slap in the face to our members, their families, their communities, and the American people who saved this company 15 years ago. Even now, politicians and taxpayers are funding the EV transition, and this it’s the thanks that the working class receives. on Stellantis.
Details of the salaried severance packages were not immediately available. Acquisitions are offered to designated unrepresented US employees with 15 or more years of service.
Hourly workers will have until June 16 to agree, Tinson confirmed. The separation will be effective from the end of June and will continue until the end of the year. Workers with retirement age will receive $50,000. Others with at least one year with the company will be offered a lump sum based on years of experience with the company.
Calling the decision “one-sided,” Lana Payne, president of Canadian auto workers’ union Unifor, said in a statement that the acquisition decision does not negate the company’s commitment to invest in vehicle and battery manufacturing and that it “will steadfastly Stellantis to these commitments.” The automaker is investing $2.8 billion to retool assembly plants in Brampton and Windsor, Ontario, and for a battery lab in Windsor. It is also building a $4.1 billion battery plant with LG Energy Solution in Windsor, which is expected to create 2,500 jobs.
“These voluntary programs,” spokesperson Shawn Morgan said in a statement, “are being offered to provide an enabling option for employees seeking to pursue new opportunities while preserving the critical roles the company needs to maintain its edge.” competitive”.
The acquisitions offered by GM and Ford had been limited to white-collar workers. GM earlier this month said about 5,000 employees have accepted its offer, charging $1 billion in the first quarter. Ford offered buyouts last year to eliminate 2,000 salaried and 1,000 contract jobs. Stellantis also offered to buy US employees last year, though it didn’t disclose how many accepted that offer. In 2021, more than 330 retired employees took a buyout from the automaker.
These moves provide “dry powder and flexibility over a pivotal 18 to 24-month period,” said Dan Ives, an analyst at investment firm Wedbush Securities Inc.
“As these companies transform, they’re looking to shed legacy costs and become more agile and efficient,” he said. “GM ripped off the Band-Aid. Others saw it was an effective and cleaner way to go through a process like that instead of layoffs and bad headlines.”
Supply chain hurdles, high transaction prices and rising interest rates have caused automakers to look at US annual sales of 14 million units instead of 17 million units before the pandemic, and EVs represent just 6% of that total right now, noted Patrick Anderson, CEO of East Lansing-based Anderson Economic Group LLC. This has significant implications for the economy, especially in Michigan.
“We have a very risky bet on a specific technology,” he said. “Economically, this is a sign that the auto industry that has produced so many decades of great jobs and great earnings is becoming a tough place to stay throughout your career. The industry is going to lose some really talented people.”
All automakers have many workers eligible for retirement, particularly in the blue-collar workforce, said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions LLC. Stellantis, however, in February closed its Belvidere, Illinois, assembly plant indefinitely, affecting 1,350 workers. It also eliminated the third shift at the Warren Truck Assembly plant in October, though it said it expects to resume shifting as the extended-wheelbase version of the full-size Wagoneer SUVs ramps up.
“All manufacturers expect fewer jobs needed to make electric vehicles,” Fiorani said. “The company will find products to fill a plant or reduce staff. The best way to do this is to find people who will retire.”
Taking steps to reduce their workforce is not uncommon in a year of contract negotiation, noted Art Wheaton, an automotive industry specialist at Cornell University’s School of Labor and Industrial Relations.
“It cuts their costs in the long run so they can have some flexibility about job postings,” she said. “That’s not necessarily a bad thing to say. We’re giving you the opportunity to retire early so you don’t have to lay off.”
The proposed cuts come as the automaker posts record profitability, not losses. In March, Stellantis paid 40,500 profit-sharing checks to eligible workers, which were set at a record $14,760, though the payments could have been more or less depending on the number of hours worked by each employee.