DETROIT (AP) — Stellantis is moving closer to closing its factory in Belvidere, Illinois, as it prepares for the costly transition from internal combustion to electric vehicles.
The factory, which now employs about 1,350 workers, officially was placed on “idle” by the company on Tuesday. That term means it intends to shut down the plant.
Belvidere's future is likely to be a lightning-rod issue in national contract talks coming up this summer with the United Auto Workers union, one that could bring a painful strike.
In a statement Tuesday, the UAW said that the decision to idle the plant will not go uncontested.
“This economic dislocation is a choice made by Stellantis to reap even higher profit,” union Vice President Rich Boyer said in a statement. "We will highlight their corporate greed to workers, community, taxpayers, and consumers.”
In a meeting with reporters Tuesday, Carlos Tavares, CEO of the company formed by combining Fiat Chrysler and France's PSA Peugeot, said Stellantis is “looking for solutions” for Belvidere, which now has no new vehicle to build. The last Jeep Cherokee small SUV rolled off the plant's assembly line on Tuesday.
The company, Tavares said, is executing a transformation to electric vehicles, which are 40% more expensive to make than those with internal combustion engines. Stellantis, he said, can't pass the increased costs to consumers because many wouldn't be able to afford new cars. It also can't sell EVs at a loss, so it's left with absorbing the added costs.
“We need to adapt to this new world,” Tavares said. “The reality of the transformation of the market is the reality that we need to face.”
He said the company is not seeking specific concessions from the Belvidere plant. “This is a global issue. This is not a Belvidere issue,” he said.
Stellantis, Tavares said, has to optimize its manufacturing and distribution footprints. "If we don' fix it then everybody's going to be in trouble," he said.
But UAW President Ray Curry said the company's “ill-advised decision” will disrupt lives, uproot families and cause repercussions through the regional parts supply chain network. Shawn Fain, his opponent in a UAW officers' election that is coming to an end soon, said the union should have enforced clauses in its contract that prevent plants from being closed.
The union said it has negotiated, and Tavares said the company has agreed to, retirement packages as well as voluntary termination and pre-retirement leaves for workers. It's also working on relocation for interested workers, the UAW statement said. The union says about 2,300 employees are affected.
The Belvidere plant could wind up making Stellantis the lead company in contract talks that open this summer with the Detroit Three automakers. As a potential warning to the automakers, the union last week raised strike pay from $400 to $500 per week.
In the past two years the UAW has become more aggressive against employers as workers have become more scarce. It has gone on strike against CNH Industrial, Deere & Co., the University of California system and Volvo Trucks to win larger pay raises and other benefits.