Stellantis Seeks to Shed 60% of its US Workers

Stellantis NV is offering voluntary buyouts to 33,500 US employees as it seeks to cut costs while transitioning to electrification, multiple news outlets reported this week. The company also is extending buyout offers to some—it didn’t share how many—employees in Canada. Information will go to employees the week of May 1.

“In response to today’s increasingly competitive global market conditions and the necessary shift to electrification, Stellantis is thoroughly reviewing its North American operations to improve efficiency, reduce costs and protect the competitiveness of our products to allow for further strategic investments to support our transformation,” the company stated.

The move to electrification includes expensive factory retooling and new production facilities, including factories for EV batteries—all before EVs are actually profitable for most automakers. In February, announced that Kokomo, IN would be the site of a $2.5 billion electric vehicle and battery factory with partner Samsung SDI. It also announced a $155 million investment in three Indiana factories as it attempts to convert half of its sales to EV by 2030.

The Detroit News notes Stellantis CEO Carlos Tavares has said that EVs are 40% more expensive to produce than traditional internal combustion engine (ICE) powered vehicles: “The company must absorb those costs, he says, to avoid increased prices on customers that would shrink the marketplace further and risk more jobs.”

Stellantis is a relatively unfamiliar name to US consumers, who are much more familiar with the venerable name, Chrysler. After Chrysler’s government-funded bankruptcy in 2009, the “pride is back, born in America”-sloganeering US firm eventually merged with Italian automaker, Fiat. Stellantis NV is the result of the merger of Fiat Chrysler and France’s PSA Groupe in 2021.

Following GM and Ford buyouts—for the same reasons

Stellantis follows similar recent moves by the other “Detroit Three” automakers. In February, GM offered buyouts to 58,000 salaried workers. According to CNBC, about GM 5,000 workers have accepted the offer. Last autumn, Ford cut 2,000 salaried workers and 1,000 contract workers.

The challenge for all of these automakers—and their employees—is that the EV is a very different creature from the ICE-powered vehicle. Setting aside the already mentioned upfront costs of retooling and building new production facilities and the higher cost of EV production. There is another factor as well: an electric drivetrain is a much simpler system, with much fewer parts, than that of an ICE car.

Metal-cutting equipment makers who supply the automotive market have fretted about this for years: fewer metal parts in the engine and drivetrain means less metal-cutting equipment needed—and fewer people needed to run those operations. Add to that the improvements in robotics and automation, and one sees that while skilled manufacturing and assembly workers will still be needed in the coming decades, there will be fewer of them—a process that began years ago, before either COVID or the EV ramp-up began.

Labor pushes back

The United Auto Workers (UAW) worry that the cascade of buyouts and layoffs could become a “race to the bottom” as workers are cut to save money while their employers see enormous profits—a prospect particularly galling for the organization regarding Stellantis, as the memory of the workforce sacrifices during the Chrysler bankruptcy remains vivid.

“Stellantis’ push to cut thousands of jobs while raking in billions in profits is disgusting,” said UAW President Shawn Fain in a statement. “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.” The statement noted that Stellantis made $18 billion in profits in 2022, and paid CEO Carlos Tavares $25 million.