DETROIT (AP) — Stellantis is nearing the closure of its Belvidere, Illinois, plant as it prepares for the costly transition from internal combustion engines to electric vehicles.
The factory, which now employs about 1,350 workers, was officially declared “inactive” by the company on Tuesday. That term means it plans to close the factory.
Belvidere’s future is likely to be a lightning rod in the national contract talks coming up this summer with the United Auto Workers union, one that could spark a painful strike.
In a statement Tuesday, the UAW said the decision to shut down the plant will not go unchallenged.
“This economic disruption is a choice by Stellantis to make even more profit,” union vice president Rich Boyer said in a statement. “We will bring their corporate greed to the attention of employees, the community, taxpayers and consumers.”
Meeting with reporters Tuesday, Carlos Tavares, CEO of the company formed by combining France’s Fiat Chrysler and PSA Peugeot, said Stellantis is “looking for solutions” for Belvidere, which now has no new vehicle to drive. to build. The last Jeep Cherokee small SUV rolled off the factory assembly line on Tuesday.
The company, Tavares said, is transitioning to electric vehicles, which are 40% more expensive to make than those powered by internal combustion engines. Stellantis, he said, cannot pass the higher costs on to consumers because many cannot afford a new car. It also can’t sell EVs at a loss, so it has to absorb the extra costs.
“We have to adapt to this new world,” Tavares said. “The reality of the market’s transformation is the reality we must face.”
He said the company is not seeking any specific concessions from the Belvidere factory. “This is a global problem. This is not a Belvidere issue,” he said.
Stellantis, Tavares said, needs to optimize its manufacturing and distribution footprint. “If we don’t fix it, everyone will be in trouble,” he said.
But UAW president Ray Curry said the company’s “ill-considered decision” will disrupt lives, uproot families and create repercussions through the regional parts supply chain network. Shawn Fain, his opponent in an upcoming UAW officer election, said the union should have included clauses in its contract that prevented plant closures.
The union said it negotiated, and Tavares said the company agreed to pension packages, voluntary termination and pre-retirement leave for employees. It is also working to reassign interested employees, the UAW statement said. About 2,300 workers have been affected, according to the union.
The Belvidere plant could lead to Stellantis becoming the lead company in contract talks that begin this summer with the Detroit Three automakers. As a possible warning to the automakers, the union last week raised strike wages from $400 to $500 per week.
In the past two years, the UAW has become more aggressive against employers as workers have become scarcer. It has gone on strike against CNH Industrial, Deere & Co., the University of California system, and Volvo Trucks to secure bigger pay raises and other benefits.
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