Stellantis offers buyouts to 33,500 hourly, salaried workers; UAW's Fain fires back

Stellantis NV is asking the more than 33,500 hourly and salaried employees to consider over the coming weeks taking voluntary buyouts announced Wednesday by the maker of Jeep SUVs and Ram pickup trucks, a response to an increasingly competitive autos market and the expensive shift to electrification.

The automaker declined to provide reduction targets for both the bargaining and non-bargaining workforces, but spokesperson Jodi Tinson said the company will make the packages available to 31,000 hourly workers in the United States and Canada and 2,500 U.S. salaried employees. In a statement, United Auto Workers President Shawn Fain blasted the proposed cuts as "disgusting."

A letter from a local United Auto Workers president circulating 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 stiff market competition and the costly shift to electrification.

Realizing a cleaner energy future is turning out to be a somewhat messy business: Stellantis follows General Motors Co. and Ford Motor Co. in offering buyouts to reduce costs and gain greater financial flexibility. The moves come amid an especially tense contract negotiation year with the UAW and amid looming fears of a recession.

Stellantis CEO Carlos Tavares has said EVs are 40% more expensive to produce than their gas- and diesel-powered counterparts. The company must absorb those costs, he says, to avoid increased prices on customers that would shrink the marketplace further and risk more jobs.

Workers eligible for the buyouts to which the UAW agreed should receive an offer letter starting next week. If open positions result from departures, they could present opportunities for indefinitely laid-off workers to step into those jobs and for part-time supplemental workers to transition into full-time roles. Stellantis employs about 43,000 hourly 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 revenues and launching 25 all-electric vehicles for the U.S. market, said Mark Stewart, Stellantis NV's chief operating officer in North America, in an email to employees obtained by 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 operations more competitive both inside and outside the company. The competition is fierce, and the cost of electrification cannot be passed on to the customer. Make no mistake, we intend to win in the marketplace."

A lot is at stake in this transition, according to experts, and newly elected UAW leaders say they are determined to ensure it doesn't become a race to the bottom as their employers rake in billions of dollars. Stellantis posted $18 billion in profit globally in 2022 with $14.9 billion in adjusted operating income from North America. Its U.S. sales in the first quarter of 2023, though, fell 9%. The automaker will share first-quarter shipments and revenue on May 3.

“Stellantis’ push 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 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 electric vehicle transition, and this is the thanks the working class gets. Shame on Stellantis.”

Details of the salaried separation packages weren't immediately available. The buyouts are being offered to designated non-represented U.S. employees with 15 or more years of service.

Hourly workers will have until June 16 to accept, Tinson confirmed. Separation will be effective as soon as the end of June and continue through the end of the year. Retirement-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.

Calling the decision "unilateral," Lana Payne, president of the Canadian autoworker union Unifor, said in a statement the buyout decision doesn't negate the company's commitment to invest in vehicle and battery production and that it will "hold Stellantis firmly to these commitments." The automaker is investing $2.8 billion to retool assembly plants in Brampton and Windsor, Ontario, and for a battery lab in Windsor. It's also building a $4.1 billion battery plant with LG Energy Solution in Windsor, which is expected to create 2,500 jobs.

"These voluntary programs," spokesperson Shawn Morgan said in a statement, "are being offered to provide a favorable option to employees looking to pursue new opportunities, while preserving critical roles the company needs in order to maintain its competitive advantage."

The buyouts offered by GM and Ford had been limited to white-collar workers. GM earlier this month said about 5,000 employees accepted its offer, taking a $1 billion charge in the first quarter. Ford offered buyouts last year to eliminate 2,000 salaried jobs and 1,000 contract jobs. Stellantis last year also offered U.S. salaried workers buyouts, though it hasn't disclosed how many accepted that offer. In 2021, more than 330 retirement-eligible salaried workers took a buyout from the automaker.

These moves provide "dry powder and flexibility for a pivotal 18-24 months ahead," said Dan Ives, an analyst for investment firm Wedbush Securities Inc.

"As these companies transform, they look to rid themselves of legacy cost and become more nimble and efficient," he said. "GM ripped the Band-Aid off. Others saw it was a successful and a cleaner way to go through a process like that instead of layoffs and negative headlines."

Supply-chain snags, high transaction prices and increased interest rates have had automakers looking at 14 million-unit 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 one specific technology," he said. "Economically, this is a signal that the auto industry that produced so many decades of great jobs and great income is becoming a hard place to stay for your whole career. The industry is going to lose some really talented people."

All of the automakers do have many retirement-eligible workers, especially in its blue-collar workforce, said Sam Fiorani, vice president of global vehicle forecast at AutoForecast Solutions LLC. Stellantis, however, in February idled 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, though it said expects to resume the shift as it ramps up the extended wheelbase version of the full-size Wagoneer SUVs.

"All the manufacturers anticipate fewer jobs needed to make electric vehicles," Fiorani said. "The company is either going to find product to fill a plant or reduce headcount. The best way to do that is find people who will retire."

Taking steps to reduce their workforce isn't uncommon in a contract negotiation year, noted Art Wheaton, an automotive industry specialist at Cornell University's Industrial and Labor Relations School.

"It reduces their longer-term cost so they can have some flexibility on job announcements," he said. "It's not necessarily a bad thing to say, ‘We're letting you have the opportunity to retire early so we don’t have to lay off.'"

The proposed cuts come as the automaker is posting record profitability, not losses. In March, Stellantis paid 40,500 eligible workers profit-sharing checks, which were pegged at a record $14,760, though the payments could have been more or less depending on the number of hours each employee worked.

bnoble@detroitnews.com

Twitter: @BreanaCNoble