United Auto Workers members attend a solidarity rally as the UAW strikes the Big Three automakers on September 15, 2023 in Detroit, Michigan.
Bill Pugliano | Getty Images
DETROIT — The most recent contract proposal by automaker Stellantis to the United Auto Workers union could lead to the closure of 18 U.S. facilities, but it could also bring new investments and repurpose an idled vehicle assembly plant in Illinois, sources familiar with the discussions told CNBC.
The plans would likely affect thousands of UAW members, shrink the automaker’s North American footprint and create a new “modernized” parts and distribution network, which company and union leaders were at odds over, the sources said.
A focal point of the plan is possible closures of 10 “Mopar” parts and distribution centers, which are scattered across the country, to consolidate them into larger Amazon-like distribution centers, said the sources, who spoke on the condition of anonymity because the talks are private and ongoing. The proposal included a potential “Mega Hub” at Belvidere Assembly, which the automaker indefinitely idled in February.
Three sources said other manufacturing facilities included in 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, a massive 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 companies adjust to remote or hybrid work, and attempt to realign their physical footprints following the coronavirus pandemic.
The sign is seen outside of the FCA US LLC Headquarters and Technology Center as it is changed to Stellantis on January 19, 2021 in Auburn Hills, Michigan.
Jeff Kowalsky | Afp | Getty Images
In 2021, Stellantis said it wanted to have a majority of its salaried employees work remotely most of the time, including the then-17,000 employees in North America. The company also confirmed that it would be “evaluating” how to work in order to allow its teams to be the most innovative, creative, and efficient. This included the then-17,000 employees located in North America. This analysis also includes possible adjustments to our real-estate portfolio. Stellantis stated that the facility “continues to be our North American Headquarters and North America Technical Center.” The company is required by law to report any potential closings or sales at locations where UAW members work. The Detroit Free Press reported that in 2022, the company might lease a part of the headquarters complex.
The potential closures were included in a proposal made by Stellantis on Thursday night to the union. After contracts expired at 11:59 pm, the union began launching targeted strikes against Detroit automakers. Negotiations between Stellantis and the UAW reconvened Monday morning.
Stellantis also included its proving grounds in Arizona in the proposal, but said operations would continue with any sale, two of the sources said.
Stellantis described Monday’s talks with UAW leaders as “constructive and focused on where we can find common ground. “
We will continue to listen to UAW leaders to determine where we can collaborate and will continue bargaining in good faith until we reach an agreement. We look forward to getting everyone back to work as soon as possible,” the company said.
The Belvidere, Illinois, plant is one of the largest 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 would be a major win for UAW leaders, but they have concerns about employment, uprooting workers and families, along with pay and automation, according to two of the sources.
Specifically, they worry new facilities may not employ as many union members as the assembly plant and current parts and distribution centers, they said. Mopar jobs pay less than traditional assembly positions, such as those at Belvidere which produced Jeep Cherokee SUVs before it ceased production in February. Discussions have also taken place about using part of Belvidere — a nearly 5 million-square-foot facility — for electric vehicle battery components, they 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 disclosing exact details, he said those plans would not impact employment.
“We need to make investments into Mopar,” Stewart said during a media roundtable Saturday. In many cases, making those investments at the location where they are located is not a good idea. Stewart, without divulging the details of the proposal, called the company’s offer for Belvidere a “very persuasive offer.” However, he said it was contingent upon the union agreeing to a tentative deal before a strike.
“So we will have to revisit all of those items, but very compelling solution for that, which was rejected,” he said 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 wage tiers for some workers in addition to other bonuses and benefits. The benefits in the proposal are similar to those offered by GM and Ford. He even encouraged a crowd Friday during a rally with U.S. Sen. Bernie Sanders, I-Vt., to chant “bull—-” at the offers of the Detroit automakers.
“I want the world to hear this: This is about the working class. This is about the haves and have-nots, and we’re tired of not having anything,” Boyer, who leads Stellantis negotiations, said during the rally.
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.
The Mopar facilities that could close include Atlanta PDC; Boston PDC; Centerline Warehouse & Packaging; Chicago PDC; Marysville PDC; Milwaukee PDC; New York PDC; Orlando PDC; Sherwood PDC; and Warren PDC.
Mopar is a combination of motor and parts, which was formed nearly a century ago. Stellantis claims to have 20 U.S. Mopar distribution centers, with more than 2,000 employees. This was a major growth area that Fiat Chrysler had planned for. But the sites were set up before Amazon’s major push for mega distribution centers, which have changed how many of them do business.
Stellantis’ proposal also includes the elimination of wage tiers within the Mopar division.
Those employees’ pay currently ranges from about $17 an hour to more than $30 an hour.
The offer also includes 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 find creative solutions for each of those. We have listened and we will continue to listen. Stewart stated that “we continue to bargain with good faith.” It’s about a win/win situation. It’s not about war. “