Jeep plant goes offline as Stellantis invests in EV production

Stellantis’ shift toward an electrified future is making one big assembly plant go dark on the same day the company revealed a sizable investment that will create job security for workers at three plants in a neighboring state.

CEO Carlos Tavares said he understands Tuesday’s shutdown of the Belvidere Assembly Plant in northern Illinois is “very uncomfortable” for the roughly 1,150 workers affected. But Tavares said the automaker is doing what it can to control costs during a transformative period when it will need to churn out electric vehicles that are more costly to produce than internal combustion models.

“For those who are very concerned and they don't want to wait, we have created some very friendly packages for early retirement, or for bridging the current age to the retirement age, so that they can solve this concern,” Tavares told reporters Tuesday. “That's what we have done, hopefully in a very humanistic way. But the reality of the transformation of the market is the reality that we need to face. And that's something that we should not run away from.”

Tavares explained that Stellantis is looking for a solution at Belvidere, and that it’s idling the plant, not closing it permanently.

He said the company isn’t trying “to get from Belvidere any specific concession. This is a global issue. This is not a Belvidere issue. Belvidere is part of the transformation that we need to execute, but we are not trying to put Belvidere in the corner. We just recognize that if we don't fix this by optimizing our footprint, our manufacturing footprint, our sourcing footprint our distribution. If we don't fix it, then everybody is going to be in trouble – not only the consumer, but also the planet because there will not be affordable EVs.”

Stellantis is doing its homework, Tavares said, and adapting to a new reality. The automaker is focused on how it can build affordable EVs that are within reach of the masses.

“If we don't fix the affordability, this will not make sense for the planet,” Tavares said. “Because if we only sell EVs to the elite, the impact on the planet is going to be marginal right? So we need volume for the impact on the plant to very positive. That means we need to have affordability so that the middle classes can buy EVs.”
 

Belvidere Assembly, which opened in 1965, has produced vehicles such as the Plymouth Fury, Dodge Neon and Jeep Compass. It has been making the Jeep Cherokee since 2017.

The UAW blasted the company Tuesday and said the decision “will not stand.”

“Stellantis’ ill-advised decision will have negative repercussions throughout the region and supplier network,” UAW President Ray Curry said in a statement. “It will disrupt lives, uproot families, and leave communities struggling to find economic drivers to pay for schools, roads and other services.”

UAW Local 1268 said Monday on Facebook that the union and Stellantis had reached an agreement to offer $50,000 retirement incentives to all eligible plant employees. Employees within two years of becoming retirement-eligible will be offered a “grow-in” to retirement.

Local 1268 also said an enhanced voluntary termination of employment program will be available.

“We have immediately addressed the concerns of the 2,300 affected employees by negotiating with the company on retirement packages, voluntary termination, as well as pre-retirement leaves to allow employees to grow into their retirement,” said UAW Vice President Rich Boyer, director of the union’s Stellantis department. “We are also working with interested members on the relocation process.”

The UAW, whose four-year contracts with each of the Detroit 3 expire in September, said it will continue to demand that Stellantis assign a product to the Belvidere plant, about 70 miles northwest of Chicago.

“This pattern of starving facilities of a product creates uncertainty for UAW members and raises questions about Stellantis’ commitment to the U.S.,” the union said.

Indiana investment

Tavares spoke to reporters hours after Stelliantis said it plans to invest $155 million in three Indiana plants to produce new electric drive modules for electric vehicles assembled in North America.

Investments will be made at the Indiana Transmission, Kokomo Transmission and Kokomo Casting plants. Stellantis said more than 265 jobs will be retained across the three plants.

The modules will be integrated into vehicles on the STLA Large and STLA Frame platforms, two of the four platforms Stellantis will use for electrified vehicles.

Stellantis said the electric motor, power electronics and transmission are combined into a single module to deliver improved performance and range at a competitive cost. The new EDM will help each platform achieve a driving range up to 500 miles.

Stellantis said the gearbox cover will be cast at Kokomo Casting and machined at Kokomo Transmission. Gear machining and final assembly will be at the Indiana Transmission Plant.

Production is expected to start in the third quarter of 2024, following retooling.

Stellantis has said it plans to launch more than 25 EVs in the U.S. by 2030.