Stellantis NV is asking its more than 33,500 hourly and salaried employees to consider taking voluntary buyouts announced Wednesday by SUV maker Jeep and pickup truck Ram, a response to an increasingly competitive automotive market and to the costly switch to electrification.
The automaker declined to provide reduction targets for negotiated and non-negotiated labor, but spokeswoman Jodi Tinson said the company would make the packages available to 31,000 hourly workers in the United States. and in Canada and 2,500 American employees. In a statement, United Auto Workers President Shawn Fain called the proposed cuts “disgusting.”
A letter from a local United Auto Workers president circulating earlier this week on Facebook suggested the company was looking to cut its hourly workforce by up to 3,500 employees in response to fierce market competition and a costly shift to the electrification.
Achieving a cleaner energy future is proving to be a somewhat messy business: Stellantis is following General Motors Co. and Ford Motor Co. in offering takeovers to cut costs and gain greater financial flexibility. The moves come amid a year of particularly tense contract negotiations with the UAW and amid looming fears of a recession.
Stellantis CEO Carlos Tavares said electric vehicles are 40% more expensive to produce than their petrol and diesel counterparts. The company must absorb these costs, he says, to avoid a price hike on customers that would further reduce the market and risk creating more jobs.
Workers eligible for buyouts the UAW has agreed to should receive a letter of offer beginning next week. If vacancies result from departures, they could present opportunities for laid-off indefinite workers to move into those jobs and for additional part-time workers to move into full-time positions. Stellantis employs approximately 43,000 hourly and 13,000 salaried 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 US market, said Mark Stewart, chief operating officer of Stellantis NV in Americas. North, in an email to employees obtained by The Detroit News. Reviews of the automaker’s operations found more room to improve overall efficiency.
“We know that investment decisions at 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 in the market.”
The stakes in this transition are high, experts say, 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 global profit of $18 billion in 2022 with adjusted operating profit of $14.9 billion in North America. Its sales in the United States in the first quarter of 2023, however, fell by 9%. The automaker will share first-quarter deliveries and revenue on May 3.
“Stellantis’ pressure to cut thousands of jobs while reaping billions in profits is disgusting,” UAW’s Fain said in his statement, echoing remarks shared last week about his “fractured” relationship. with Stellantis and at last month’s special negotiation convention. “It’s 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 transition to the electric vehicle, and that’s thanks to the working class Shame on Stellantis.
Details of employee severance packages were not immediately available. Buyouts are available to designated unrepresented US employees with 15 or more years of service.
Hourly workers will have until June 16 to accept, Tinson confirmed. The separation will be effective from the end of June and will continue until the end of the year. Older workers eligible for retirement 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 “unilateral”, Lana Payne, president of the Canadian autoworkers union Unifor, said in a statement that the takeover decision does not deny the company’s commitment to invest in the production of vehicles and batteries and that it “will firmly hold Stellantis to these commitments”. The automaker is investing $2.8 billion to retool assembly plants in Brampton and Windsor, Ontario, and a battery lab in Windsor. It’s also building a $4.1 billion battery plant. dollars 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 offered to provide a supportive option for employees looking to pursue new opportunities, while preserving the critical roles the business needs to sustain its competitive advantage.
Takeovers offered by GM and Ford had been limited to white-collar workers. GM said earlier this month that about 5,000 employees had accepted its offer, taking a $1 billion charge in the first quarter. Ford offered takeovers last year to eliminate 2,000 salaried jobs and 1,000 contract jobs. Last year, Stellantis also offered buyouts to US employees, although it did not reveal how many took up the offer. In 2021, more than 330 employees eligible for retirement bought the car manufacturer.
These moves offer “dry powder and flexibility for the next 18 to 24 months,” said Dan Ives, analyst for investment firm Wedbush Securities Inc.
“As these companies transform, they seek to shed legacy costs and become more agile and efficient,” he said. “GM ripped the band-aid off. Others saw it as an efficient, cleaner way to go through a process like that instead of layoffs and negative headlines.”
Supply chain issues, high transaction prices and rising interest rates have led automakers to eye annual sales of 14 million units in the United States instead of 17 million. units before the pandemic — and electric vehicles are only 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, it’s a signal that the automotive industry that has produced so many great jobs and great incomes for decades is becoming a tough place to live for your entire career. The industry is going to lose some really talented people. “
All automakers have plenty of workers eligible for retirement, especially in their blue-collar workforces, said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions LLC. Stellantis, however, in February idled its Belvidere, Illinois assembly plant indefinitely, affecting 1,350 workers. In October, he also eliminated the third shift at the Warren Truck Assembly Plant, although he said he expects to resume the shift as he ramps up the extended wheelbase version of the Full-size Wagoneer SUV.
“All automakers foresee fewer jobs needed to make electric vehicles,” Fiorani said. “The company is either going to find a product to fill a factory or reduce its workforce. The best way to do that is to find people who will retire.”
Taking steps to downsize is not uncommon during a year of contract negotiations, noted Art Wheaton, an automotive industry specialist at Cornell University’s School of Industrial and Labor Relations.
“It lowers their longer-term cost so they can have some flexibility on job postings,” he said. “It’s not necessarily a bad thing to say, ‘We’re giving you the opportunity to retire early so we don’t have to lay off. “”
The proposed cuts come as the automaker posts record profitability, not losses. In March, Stellantis paid out 40,500 profit-sharing checks to eligible workers, which were set at a record $14,760, although payouts could have been larger or smaller depending on the number of hours each employee worked. .