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 and 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. Following those plans, the company confirmed it was "evaluating how we work to enable our teams to be their most innovative, creative and efficient. That analysis includes potential adjustments to our real estate portfolio." Stellantis said the facility would "continue to be our North American headquarters and North America technical center."
It's not guaranteed the facilities would close under a labor deal; however, Stellantis is required to include potential closures or sales of any location where a UAW member works, a company source said. The Detroit Free Press reported in 2022 that the company could lease a portion of the headquarters complex.
The 18 potential closures were part of a Thursday night proposal by Stellantis to the union, which launched targeted strikes against the Detroit automakers after contracts expired at 11:59 p.m. on Thursday. 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.
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 plants and current parts and distribution centers, they said. Mopar jobs also pay less than positions at traditional assembly facilities such as Belvidere, which was producing Jeep Cherokee SUVs up until its idling in February.
The potential closures were part of Stellantis' most recent offer presented to the union Thursday night. Two sources said the parts proposal for Belvidere has been one of several discussions regarding the plant, and the offer could change, based on the talks.
Discussions have also taken place about using part of Belvidere – a nearly 5 million-square-foot facility – for electric vehicle battery components, two sources 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 a lot of cases, it … doesn't make sense to make those investments in the location that they're in."
Stewart, without disclosing details of the plan, described the company's proposal for Belvidere as a "very compelling 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. Benefits in the proposal are in-line with other offers from GM and Ford.
UAW Vice President Rich Boyer addresses union members during a "Solidarity Sunday" rally on Aug. 20, 2023 in Warren, Mich.
Michael Wayland / CNBC
UAW Vice President Rich Boyer has made it clear that the Belvidere plant is a make-or-break issue. He even encouraged a crowd Friday during a rally with U.S. Sen. Bernie Sanders, I-Vt., to chant "bulls***" 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 would 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 says it has 20 U.S. Mopar parts and distribution centers and more than 2,000 active employees in the unit.
Mopar was an expected major growth area for Stellantis' predecessor, Fiat Chrysler, which established a growth plan for the employees and facilities. But the sites were established 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 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 listened, we continue to listen. We continue to bargain in good faith," Stewart said. "It really is about a win-win. You know, it's not about warfare."