Stellantis could close 18 facilities in deal

DETROIT — The automaker’s latest contract proposal Stellantis to the United Auto Workers union could lead to the closure of 18 U.S. facilities, but it could also lead to new investment and repurposing an idled vehicle assembly plant in Illinois, sources familiar with the discussions told CNBC .

The plans would likely affect thousands of UAW members, shrink the automaker’s North American footprint, and create a new “modernized” parts and distribution network, which company and union leaders were focused on. disagreed, the sources said.

A central point of the plan concerns the possible closure of 10 “Mopar” parts and distribution centers, scattered across the country, to consolidate them into a larger one. Amazon-like distribution centers, said the sources, who spoke on condition of anonymity because the talks are private and ongoing. The proposal included a potential “Mega Hub” at Belvidere Assembly, which the automaker idled indefinitely in February.

Three sources said other manufacturing facilities included in the proposal are the Tipton transmission plant in Indiana; the Trenton engine complex, partially decommissioned; already in slow motion Mount Elliott Tool & Die in Michigan; and the Belvidere Assembly, in slow motion. Also included are a Detroit warehouse, offices and the automaker’s North American headquarters and technology center, a massive 500-acre campus in the Detroit metro area once used as Chrysler’s global headquarters.

The latest element of the offering for its North American headquarters comes as companies adapt to remote or hybrid work and try to realign their physical footprints in the wake of the coronavirus pandemic.

In 2021, Stellantis said it wanted a majority of its employees to work remotely most of the time, including the then 17,000 employees in North America. Following these plans, the company confirmed that it is “evaluating how we work to enable our teams to be most innovative, creative and effective. This analysis includes potential adjustments to our real estate portfolio.” Stellantis said the facility “will continue to be our North American headquarters and technical center in North America.”

There is no guarantee that facilities would close under a labor agreement; However, Stellantis is required to include potential closures or sales of any location where a UAW member works, a company source said. The Detroit Free Press reported in 2022 that the company could lease part of the headquarters complex.

The 18 potential closures were part of a proposal made Thursday evening by Stellantis to the union, which began launching targeted strikes against Detroit automakers after contracts expired later at 11:59 p.m. Negotiations between Stellantis and the UAW resumed Monday morning.

Stellantis also included its Arizona proving grounds in the proposal, but said operations would continue with any sale, two of the sources said.

The Belvidere, Illinois, plant is one of the main points of contention between the automaker and the union, which is now in its fourth day of targeted strike action at three major assembly plants. The union strikes a factory at Stellantis, General engines And Ford engine, but he threatened that further work stoppages will occur, depending on how negotiations progress.

Reopening the Illinois plant would be a major victory for UAW leaders, but they have concerns about jobs, the uprooting of workers and families, as well as wages and automation, according to two of the sources.

Specifically, they fear the new facilities won’t employ as many union members as current assembly plants and parts and distribution centers, they said. Jobs at Mopar also pay less than those at traditional assembly plants such as Belvidere, which produced Jeep Cherokee SUVs until it was idled in February.

Two sources said the parts proposal for Belvidere was one of several discussions regarding the plant and that the offer could change depending on the discussions.

Discussions have also been held about using part of Belvidere — a nearly 5 million square foot facility — for electric vehicle battery components, two sources said.

Mark Stewart, Stellantis’ North American chief operating officer, who is overseeing the UAW negotiations, said the company needs to “modernize” Mopar’s facilities. Without disclosing exact details, he said these projects would not have an impact on employment.

“We need to invest in Mopar,” Stewart said during a media roundtable Saturday. “In many cases, it doesn’t make sense to make these investments where they are.”

Stewart, without disclosing details of the plan, described the company’s proposal for Belvidere as a “very compelling offer.” However, he added that this was dependent on the union agreeing to an agreement in principle before a strike.

“So we will have to revisit all these points, but a very compelling solution for this, which was rejected,” he said on Saturday.

Stellantis’ most recent proposal to the UAW included raises of nearly 21 percent over the life of the contract, including an immediate 10 percent pay increase, and would end pay levels for some workers in addition to others bonuses and benefits. The proposal’s benefits are consistent with other offerings from GM and Ford.

UAW Vice President Rich Boyer stressed that the Belvidere plant was a decisive issue. He even encouraged a crowd Friday at a rally with U.S. Sen. Bernie Sanders, I-Vt., to chant “bull—-” at deals from Detroit automakers.

“I want the world to hear this: It’s about the working class. It’s about the haves and the have-nots, and we’re tired of having nothing,” Boyer, who is leading the Stellantis negotiations, said. during the gathering.

The company’s current proposal would establish new Mopar facilities in Fishkill, N.Y., and Macon, Ga., and move work from several Michigan facilities to its Trenton North plant, located southwest of Detroit, according to two sources.

Mopar facilities that could close include Atlanta PDC; Boston PDC; Centerline Warehouse and Packaging; Chicago PDC; Marysville PDC; Milwaukee PDC; New York PDC; Orlando PDC; Sherwood CPD; and Warren PDC.

Mopar is an engine and parts combination created almost a century ago. Stellantis says it has 20 Mopar parts and distribution centers in the United States and more than 2,000 active employees in the unit.

Mopar was a major growth area anticipated by the company’s predecessor, Fiat Chrysler, which had established a growth plan for employees and facilities. But those sites were created before Amazon’s major mega-fulfillment center push, which changed the way many of them do business.

Stellantis’ proposal also includes removing salary levels within the Mopar division. Pay for these employees currently ranges from about $17 per hour to more than $30 per hour. The offer also includes a moratorium on the sale or spin-off of Mopar’s business for the duration of the four-year agreement.

“We’re taking this seriously and responsibly, and we’re trying to find creative solutions for each of these issues. We’ve listened, we continue to listen. We continue to negotiate in good faith,” Stewart said. “It’s really a win-win situation. You know, it’s not about war.”