- Stellantis’ latest offer to the United Auto Workers could lead to the closure of 18 facilities, sources told CNBC.
- The proposal was made before the start of the UAW attacks against Stellantis, Ford and GM.
- The plans would likely affect thousands of UAW members, reduce the automaker’s footprint in North America and create a new, “modernized” parts and distribution network, the sources said.
United Auto Workers members attend a solidarity rally as the UAW attacks the Big Three automakers on September 15, 2023 in Detroit, Michigan.
Bill Pugliano | fake images
DETROIT – Automaker Stellantis’ latest contract proposal 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 idle vehicle assembly plant in Illinois, they said. sources familiar with the discussions told CNBC. .
The plans would likely affect thousands of UAW members, reduce the automaker’s footprint in North America and create a new “modernized” parts and distribution network, which company and union leaders were at odds over, sources said.
Central to the plan is the possible closure of 10 “Mopar” distribution and parts centers, which are scattered across the country, to consolidate them into larger “Amazon-type” distribution centers, said the sources, who spoke on condition of anonymity. because the conversations are private and continuous. The proposal included a potential “Mega Hub” at Belvidere Assembly, which the automaker mothballed indefinitely in February.
Three sources said other manufacturing facilities included in the proposal are the Tipton transmission plant in Indiana; the partially dismantled Trenton Engine Complex and the already inactive Mount Elliott Tool & Die in Michigan; and the inactive Belvidere Assembly. Also included were a warehouse in Detroit, office space and the automaker’s North American headquarters and technology center, a massive 500-acre campus in metro Detroit that was previously used as Chrysler’s global headquarters.
The latest part of the offering involving 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.
The sign is seen outside the FCA US LLC headquarters and technology center as it switched to Stellantis on January 19, 2021 in Auburn Hills, Michigan.
Jeff Kowalsky | afp | fake images
In 2021, Stellantis said it wanted most of its salaried employees to work remotely most of the time, including the then 17,000 employees in North America. Following those plans, the company confirmed it was “evaluating how we work to enable our teams to be more innovative, creative and efficient. That analysis includes potential adjustments to our real estate portfolio.” Stellantis said the facility “will continue to be our North American headquarters and our North American technical center.”
Facilities are not guaranteed to close under a labor agreement; However, Stellantis must include possible 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 a portion of the headquarters complex.
The 18 potential closures were part of a Thursday night proposal from Stellantis to the union, which launched targeted strikes against Detroit automakers after contracts expired at 11:59 p.m. Thursday. Negotiations between Stellantis and the UAW resumed Monday morning.
Stellantis also included its testing grounds in Arizona in the proposal, but said operations would continue with any sale, two of the sources said.
The Belvidere, Illinois, plant is one of the biggest points of contention between the automaker and the union, which is now in the fourth day of selective strikes at three major assembly plants. The union is on strike at a Stellantis, General Motors and Ford Motor plant, but has threatened more work stoppages, depending on how negotiations go.
Reopening the Illinois plant would be a big victory for UAW leaders, but they are concerned about employment, uprooting workers and families, as well as wages and automation, according to two of the sources.
Specifically, they are concerned that the new facilities will not employ as many union members as current assembly plants and distribution and parts centers, they said. Mopar jobs also pay less than positions at traditional assembly facilities like Belvidere, which produced Jeep Cherokee SUVs until it was idled in February.
Two sources said the parts proposal for Belvidere has been one of several discussions about the plant and that the offer could change depending on the talks.
Talks have also been underway about using part of Belvidere, a nearly 5 million-square-foot facility, for electric vehicle battery components, two sources said.
Stellantis North American chief operating officer Mark Stewart, who is overseeing the UAW talks, said the company needs to “modernize” the Mopar facilities. Without revealing exact details, he said those plans would not affect employment.
“We need to make investments in Mopar,” Stewart said during a media roundtable Saturday. “In many cases, … it doesn’t make sense to make those 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 said it depended on the union agreeing to a tentative agreement before a strike.
“So we will have to review all those points, but there is a very convincing solution for that, which was rejected,” he said on Saturday.
Stellantis’ most recent proposal to the UAW included raises of nearly 21% over the course of the contract, including an immediate 10% pay increase, and would end pay levels for some workers, in addition to other bonuses and benefits. The benefits of the proposal are in line with other offers from GM and Ford.
UAW Vice President Rich Boyer addresses union members during a “Solidarity Sunday” rally on August 20, 2023 in Warren, Michigan.
Michael Wayland/CNBC
UAW Vice President Rich Boyer has made it clear that the Belvidere plant is a make-or-break issue. He even encouraged a crowd Friday during a rally with U.S. Sen. Bernie Sanders, I-Vt., to shout “bulls***” at offers from Detroit automakers.
“I want the world to hear this: This is about the working class. It’s about the haves and the have-nots, and we’re tired of having nothing,” Boyer, who is leading negotiations for Stellantis, said during the manifestation.
The company’s current proposal would establish new Mopar facilities in Fishkill, New York and Macon, Georgia; and move work from several facilities in Michigan to its Trenton North plant, located southwest of Detroit, according to two sources.
Mopar facilities that could close include Atlanta PDC; Boston PDC; Central line warehouse and packaging; Chicago PDC; Marysville PDC; Milwaukee PDC; New York PDC; Orlando PDC; Sherwood PDC; and Warren PDC.
Mopar is an engine and parts combination that was formed almost a century ago. Stellantis says it has 20 Mopar parts and distribution centers in the U.S. and more than 2,000 active employees in the unit.
Mopar was an expected major growth area for Stellantis’ predecessor, Fiat Chrysler, which established a growth plan for employees and facilities. But the sites were established before Amazon’s big push to create mega-fulfillment centers, which has changed the way many of them do business.
Stellantis’ proposal also includes the elimination of salary levels within the Mopar division. The wages of those employees currently range from $17 to more than $30 an hour. The offer also includes a moratorium on the sale or spin-off of Mopar operations during the life of the four-year agreement.
“We are taking it seriously and responsibly and we are trying to find creative solutions for each of them. We listen, we continue to listen. We continue to negotiate in good faith,” Stewart said. “It’s really about win-win. You know, it’s not about a war.”
