Carmaker Stellantis is offering buyout packages to thousands of its salaried workers in the United States as the company transitions to electric vehicles, with workers receiving lump-sum payments to leave the firm.
“As we prepare for the transition to electric vehicles, Stellantis announced today that it will offer a voluntary separation package to assist those non-represented employees who would like to separate or retire from the company to pursue other interests with a favorable package of benefits,” company spokesperson Jodi Tinson said in a Nov. 13 statement, according to multiple outlets. The Stellantis offer is applicable to employees who have at least five years of experience. Workers with five to nine years of experience will get three months of pay in a lump sum.
This rises to six months of pay for those with 10–14 years of experience, nine months of pay for 15–19 years, and one year of pay for workers with over 20 years of experience. “As the U.S. automotive industry continues to face challenging market conditions, Stellantis is taking the necessary structural actions to protect our operations and the company,” the spokesperson added.
There are roughly 12,700 salaried workers at Stellantis who are not represented by any employee unions. Out of these workers, the voluntary buyout offer is applicable to around 6,400 employees. Those who take up the offer will be expected to leave the company before the year ends.
The company also employs 2.500 salaried union members. However, the buyout offer is not available to these workers.
This isn’t the first time that Stellantis offered buyouts for its salaried employees. The company offered it in 2021 and 2022.
In April this year, 2,500 salaried employees in the United States and 31,000 hourly workers in America and Canada were given the buyout option. The firm has not revealed how many workers took up on the offer.
The company’s decision to cut down employee numbers while transitioning to electric vehicle (EV) manufacturing has faced strong criticism.
Shawn Fain, president of the United Auto Workers (UAW) union, pointed out in April that the company failed to include the group when it announced a battery factory in Kokomo, Indiana. He also blasted Stelllantis’s plans to close a factory in Belvidere, Illinois. The plant has been kept on “idle” mode since February, with most of the roughly 1,350 workers laid off.
The job cuts by Stellantis come amid an aggressive push by the Biden administration to promote the use of electric vehicles at the expense of gas vehicles. In August 2021, President Joe Biden announced that he wants half of all trucks and cars sold in the United States to be electric vehicles by 2030.
Union Contracts
Stellantis’s buyout offer comes as the company recently reached a tentative employment deal with the UAW. More than 14,000 UAW union members carried out a six-week-long strike at two plants of Stellantis, one in Michigan and another in Ohio. The strike was also conducted at several distribution centers across the country.According to the deal, Stellantis will slowly raise wages for UAW members by 25 percent over a period of four and a half years. The agreement will push up hourly wages of plant workers from $31 to $42. The contract is currently under ratification by the union members.
On Oct. 31, the company said that it would be looking to offset the financial losses incurred due to the strikes through potential cost cuts. Stellantis estimates that the strikes could cost the firm $795 million in lost profitability this year.
Speaking to The Detroit News, Sam Abuelsamid, principal e-mobility analyst at market research firm Guidehouse Inc., pointed out that Stellantis “has talked previously about cutting various costs in order to fund their investments in EVs and electrification going forward.”
“It’s not surprising that they’re looking to cut some costs as they get the sales up on those high-margin vehicles,” he said. Assuming the UAW contract gets ratified, Stellantis will have to “get some savings somewhere else to offset that.”
The proposed contract also includes increased pension contributions and $50,000 in retirement incentive packages.
In addition to the buyout offers, Stellantis is also implementing other cost-cutting measures. The company has cut back on expenses at its global factories. In June, Stellantis told suppliers that it would be looking for better pricing for its purchases.
Stellantis is planning to construct an EV battery plant in Belvidere, Illinois, which it claims will create roughly 1,300 jobs for Americans. The firm also plans to manufacture a handful of EV versions of its existing models at three plants in Michigan and one in Ohio.
The UAW has criticized automakers for the EV battery plants they have opened or plan to open as the union is concerned that workers at these facilities will receive lower wages compared to existing assembly plants. This could also result in a major drop in membership for the UAW.
“These companies are extremely profitable and will continue to make money hand over fist whether they’re selling combustion engines or EVs. Yet the workers get a smaller and smaller piece of the pie,” UAW president Mr. Fain said in a statement a few months back.
