United Auto Employees members attend a solidarity rally because the UAW strikes the Big Three automakers on September 15, 2023 in Detroit, Michigan.
Bill Pugliano | Getty Images
DETROIT — Probably the most recent contract proposal by automaker Stellantis to the United Auto Employees union may lead to the closure of 18 U.S. facilities, but it surely could also bring recent investments and repurpose an idled vehicle assembly plant in Illinois, sources acquainted with the discussions told CNBC.
The plans would likely affect hundreds of UAW members, shrink the automaker’s North American footprint and create a recent “modernized” parts and distribution network, which company and union leaders were at odds over, the sources said.
A focus of the plan is feasible closures of 10 “Mopar” parts and distribution centers, that are scattered across the country, to consolidate them into larger Amazon-like distribution centers, said the sources, who spoke on the condition of anonymity since the talks are private and ongoing. The proposal included a possible “Mega Hub” at Belvidere Assembly, which the automaker indefinitely idled in February.
Three sources said other manufacturing facilities included within the proposal are Tipton Transmission Plant in Indiana; the partially decommissioned Trenton Engine Complex; the already idled Mount Elliott Tool & Die in Michigan; and the idled Belvidere Assembly. Also included were a Detroit warehouse, office space and the automaker’s North American headquarters and technology center, an enormous 500-acre campus in metro Detroit formerly used as Chrysler’s world headquarters.
The last piece of the offer involving its North American headquarters comes as firms adjust to distant or hybrid work, and try to realign their physical footprints following the coronavirus pandemic.
The sign is seen outside of the FCA US LLC Headquarters and Technology Center because it is modified to Stellantis on January 19, 2021 in Auburn Hills, Michigan.
Jeff Kowalsky | Afp | Getty Images
In 2021, Stellantis said it desired to have a majority of its salaried employees work remotely more often than not, including the then-17,000 employees in North America. Following those plans, the corporate confirmed it was “evaluating how we work to enable our teams to be their most modern, creative and efficient. That evaluation includes potential adjustments to our real estate portfolio.” Stellantis said the ability would “proceed to be our North American headquarters and North America technical center.”
It is not guaranteed the facilities would close under a labor deal; nevertheless, Stellantis is required to incorporate potential closures or sales of any location where a UAW member works, an organization source said. The Detroit Free Press reported in 2022 that the corporate could lease a portion of the headquarters complex.
The 18 potential closures were a part of a Thursday night proposal by Stellantis to the union, which began to launch targeted strikes against the Detroit automakers after contracts expired later at 11:59 p.m. Negotiations between Stellantis and the UAW reconvened Monday morning.
Stellantis also included its proving grounds in Arizona within the proposal, but said operations would proceed with any sale, two of the sources said.
Stellantis described Monday’s talks with UAW leaders as “constructive and focused on where we are able to find common ground.”
“We proceed to take heed to the UAW to discover where we are able to work together and can proceed to bargain in good faith until an agreement is reached. We stay up for getting everyone back to work as soon as possible,” the corporate said.
Belvidere Assembly
The Belvidere, Illinois, plant is certainly one of the biggest points of contention between the automaker and union, which is now on the fourth day of targeted strikes at three major assembly plants. The union is striking one plant each at Stellantis, General Motors and Ford Motor, but has threatened additional work stoppages will occur, depending how negotiations go.
Reopening the Illinois plant can be a serious win for UAW leaders, but they’ve concerns about employment, uprooting staff and families, together with pay and automation, in response to two of the sources.
Specifically, they worry recent facilities may not employ as many union members because the assembly plant and current parts and distribution centers, they said. Mopar jobs also pay lower than positions at traditional assembly facilities resembling Belvidere, which was producing Jeep Cherokee SUVs until its idling in February.
Two sources said the parts proposal for Belvidere has been certainly one of several discussions regarding the plant, and the offer could change, based on the talks. Discussions have also taken place about using a part of Belvidere — an almost 5 million-square-foot facility — for electric vehicle battery components, they said.
Stellantis North American Chief Operating Officer Mark Stewart, who’s overseeing the UAW talks, said the corporate must “modernize” the Mopar facilities. Without disclosing exact details, he said those plans wouldn’t impact employment.
“We’d like to make investments into Mopar,” Stewart said during a media roundtable Saturday. “In a variety of cases, it … doesn’t make sense to make those investments in the situation that they are in.”
Stewart, without disclosing details of the plan, described the corporate’s proposal for Belvidere as a “very compelling offer.” Nonetheless, he said it was contingent upon the union agreeing to a tentative deal before a strike.
“So we could have to revisit all of those items, but very compelling solution for that, which was rejected,” he said Saturday.
Stellantis’ most up-to-date proposal to the UAW included raises of nearly 21% over the course of the contract, including a direct 10% pay increase, and would end wage tiers for some staff along with other bonuses and advantages. Advantages within the proposal are according to other offers from GM and Ford.
UAW Vice President Wealthy Boyer addresses union members during a “Solidarity Sunday” rally on Aug. 20, 2023 in Warren, Mich.
Michael Wayland / CNBC
UAW Vice President Wealthy Boyer has stressed 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 chant “bull—-” on the offers of the Detroit automakers.
“I would like the world to listen to this: That is in regards to the working class. That is in regards to the haves and have-nots, and we’re uninterested in not having anything,” Boyer, who leads Stellantis negotiations, said in the course of the rally.
Mopar
The corporate’s current proposal would establish recent Mopar facilities in Fishkill, Latest York, and Macon, Georgia, and move work from several facilities in Michigan to its Trenton North plant, positioned southwest of Detroit, in response to two sources.
The Mopar facilities that would close include Atlanta PDC; Boston PDC; Centerline Warehouse & Packaging; Chicago PDC; Marysville PDC; Milwaukee PDC; Latest York PDC; Orlando PDC; Sherwood PDC; and Warren PDC.
Mopar is a mix of motor and parts, which was formed nearly a century ago. Stellantis says it has 20 U.S. Mopar parts and distribution centers and greater than 2,000 lively employees within the unit.
Mopar was an expected major growth area for company predecessor Fiat Chrysler, which established a growth plan for the workers and facilities. However the sites were arrange before Amazon’s major push for mega distribution centers, which have modified how lots of them do business.
Stellantis’ proposal also includes the elimination of wage tiers inside the Mopar division. Those employees’ pay currently ranges from about $17 an hour to greater than $30 an hour. The offer also features a moratorium on selling or spinning off the Mopar operations through the term of the four-year deal.
“We’re taking it seriously responsibly, and we’re trying to seek out creative solutions for every of those. We listened, we proceed to listen. We proceed to bargain in good faith,” Stewart said. “It truly is a few win-win. You realize, it is not about warfare.”
