Stellantis offers buyout to 33,500 workers; UAW’s Fain fires back
Stellantis NV is asking its more than 33,500 hourly and salaried workers to consider in the coming weeks taking voluntary buyouts announced Wednesday by the maker of Jeep SUVs and Ram pickups, a response to an increasingly competitive auto market and the expensive transition to electrification.
The automaker declined to provide reduction targets for both its bargaining and non-bargaining workforces, but spokeswoman Jodi Tinson said the company will make the packages available to 31,000 hourly workers in the U.S. and Canada and 2,500 U.S. salaried workers. In a statement, United Auto Workers President Shawn Fain called the proposed cuts “disgusting.”
A letter from a local United Auto Workers president that circulated earlier this week on Facebook suggested the company is looking to reduce its hourly workforce by as many as 3,500 employees in response to fierce market competition and the costly transition to electrification.
Realizing a cleaner energy future turns out to be a bit of a messy business: Stellantis follows General Motors Co. and Ford Motor Co. in offering acquisitions to reduce costs and gain greater financial flexibility. The moves come amid a particularly tense year of contract negotiations with the UAW and amid looming fears of a recession.
Stellanti CEO Carlos Tavares has said that electric cars are 40% more expensive to produce than their gas and diesel-powered counterparts. The company must absorb these costs, he says, to avoid increased prices for customers that will further shrink the marketplace and risk more jobs.
Workers eligible for the buyouts agreed to by the UAW should receive an offer letter starting next week. If vacancies are the result of layoffs, they can provide opportunities for workers on indefinite layoff to move into those jobs and for part-timers to move into full-time roles. Stellantis employs approximately 43,000 hourly employees and 13,000 salaried workers 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 revenue and launching 25 all-electric vehicles for the US market, Mark Stewart, Stellantis NV’s North America CEO, said in an email to staff of The Detroit News. Reviews of the automaker’s operations have 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 transformation costs,” he said. “As a team, we must continue to identify efficiencies to make our business 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 .”
Much is at stake in this transition, experts say, and newly elected UAW leaders say they are determined to ensure there is no race to the bottom as their employers collect billions of dollars. Stellantis delivered $18 billion in profits globally in 2022 with $14.9 billion in adjusted operating income from North America. However, sales in the US in the first quarter of 2023 fell 9%. The automaker will share shipments and earnings in the first quarter on May 3.
“Stellantis’ efforts to cut thousands of jobs while raking in billions in profits is disgusting,” the UAW’s Fain said in his statement, echoing remarks shared last week about his “fractured” relationship with Stellantis and during the special bargaining convention last year month. “This is 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 bankrolling the transition to electric cars and this is the thanks the working class gets. Shame on Stellantis.”
Details of paid separation packages were not immediately available. The acquisitions are offered to designated non-represented US employees with 15 or more years of service.
Hourly workers will have until June 16 to accept, Tinson confirmed. The separation takes effect as soon as the end of June and continues through the year. Pension-eligible seniority workers 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.
Lana Payne, president of the Canadian auto workers union Unifor, called the decision “one-sided,” saying 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 “hold Stellantis to those commitments.” The automaker invests $2.8 billion to rebuild assembly facilities in Brampton and Windsor, Ontario, and for a battery lab in Windsor It is also building a $4.1 billion battery facility with LG Energy Solution in Windsor, which is expected to create 2,500 jobs.
“These voluntary programs,” spokesman Shawn Morgan said in a statement, “are being offered to provide a beneficial alternative to employees who want to pursue new opportunities, while preserving critical roles the company needs to maintain its competitive edge.”
The buyouts offered by GM and Ford had been limited to white-collar workers. GM earlier this month said about 5,000 employees accepted the offer, taking a $1 billion charge in the first quarter. Ford offered buyouts last year to eliminate 2,000 salary jobs and 1,000 contract jobs. Stellantis last year also offered buyouts to U.S. salaried workers, although it has not disclosed how many accepted the offer. In 2021, more than 330 pensionable civil servants took a buyout from the car manufacturer.
Those moves provide “dry powder and flexibility for the key 18-24 months ahead,” said Dan Ives, an analyst for investment firm Wedbush Securities Inc.
“As these companies transform, they’re looking to get rid of old costs and become more nimble and efficient,” he said. “GM ripped off the band-aid. Others saw that there was a successful and a cleaner way to go through such a process instead of layoffs and negative headlines.”
Supply chain issues, high transaction costs and rising interest rates have automakers looking at 14 million units of annual U.S. sales instead of 17 million units pre-pandemic — and EVs represent just 6% of that total right now, noted Patrick Anderson, CEO of East Lansing-based Anderson Economic Group LLC. That 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 signal that the auto industry that produced so many decades of good jobs and big incomes is becoming a difficult place to live a career. The industry is going to lose some really talented people.”
All of the automakers have many workers who are eligible for retirement, especially in the workforce, said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions LLC. However, Stellantis in February laid off its Belvidere Assembly Plant in Illinois indefinitely, affecting 1,350 workers. It also in October eliminated the third shift at the Warren Truck Assembly Plant, although it said it expects to resume the shift as it ramps up the extended-wheelbase version of its full-size Wagoneer SUVs.
“All the manufacturers expect fewer jobs needed to make electric vehicles,” Fiorani said. “The company has to either find a product to fill a facility or reduce the number of employees. The best way to do that is to find people who want to retire.”
Taking steps to reduce the workforce is not unusual in a contract negotiation year, noted Art Wheaton, an auto industry specialist at Cornell University’s Industrial and Labor Relations School.
“It lowers their costs in the longer term, so they can have some flexibility when it comes to job postings,” he said. “It’s not necessarily a bad thing to say, ‘We’ll let you have the opportunity to take early retirement so we don’t have to lay off’.”
The proposed cuts come as the automaker posts record profitability, not losses. In March, Stellantis paid 40,500 eligible workers profit-sharing checks, which tied for a record $14,760, although the payments could have been more or less dependent on the number of hours each employee worked.