Toni Dimaano Auto 12.11.2022 22:Dec PM EST

Stellantis Cites EV Costs For Layoffs, Illinois Facility To Go Idle

Jeep's parent company Stellantis announces that it is laying off approximately 1,350 staff due to the increasing costs of vehicle electrification.

According to Engadget, in addition to this, the company's manufacturing plant in Illinois is also temporarily going idle.

Stellantis Is Suffering With The Whole Automotive Industry

The Jeep company is ceasing production starting February 28 next year, saying that it needed to take difficult but necessary action in response to the challenges hitting the market.

Stellantis says that the ongoing COVID pandemic and the global microchip shortage have been difficult, but the biggest problem has been the cost of the electrification of automobiles.

With this, it is laying off around 1,350 of its employees and is temporarily halting operation in the Belvidder, Illinois manufacturing plant.

CNN Business writes that the factory is going idle beginning February 23, while the cutbacks on employees will start five days after.

Additionally, the company says that the layoffs are expected to go longer than six months, but Stellantis pledges to make sure that laid-off Belvidere employees will be placed in other open positions.

Moreover, the automaker claims that it is looking for other opportunities to repurpose the factory, which used to produce the Jeep Cherokee crossover.

Tim Ferguson, chairman of the United Auto Workers Local 1268 shop, says that company documents show that in connection to this, the Jeep Cherokee production will be moved to a facility in Toluca, Mexico.

He also alleged that this might mean that there is a certainty that the Illinois plant is closing, but Stellantis did not confirm or deny the allegations.

Engadget reports that Stellantis is not the first automotive company to announce recent layoffs, as Ford also cut about 3,000 employees back in August.

It is also important to note that this Stellantis announcement came around the same day workers at a General Motors-LG battery cell facility in Ohio voted for unionization.

Union Workers Are Not Happy With The Holiday Layoffs

CNN Business details that the United Auto Workers International Union says that it is angered by the company's decision.

The group's president Ray Curry even claims that it is unacceptable and grossly misguided to say that Stellantis is idling that plant, especially during the holiday season.

"Announcing the closure just a few weeks from the holidays is also a cruel disregard for the contributions of our members from UAW Locals 1268 and 1761. We will fight back against this announcement," Curry notes.

According to CNBC, the plant in Belvidere has only been running on one of its three assembly shifts, and it has been slowing down operations since the start of the pandemic.

Following this, the sales for the Jeep Cherokee dipped by about 61% during the third quarter of this year, more than other vehicles in the Jeep category.

Last July, the company made a commitment worth $35.5 billion to produce electric vehicles by the end of 20225, planning to make it 70% of its European sales.

Additionally, the company is also looking to expand its portfolio and make 40% of its US sales to be fully electric or plugged-in hybrids.