Cost of new UAW contract could backfire on some at Stellantis

The UAW hailed its new contract with Stellantis in November as a triumphant moment, winning $19 billion in new U.S. investment, 25 percent wage increases and full-time status for more than 3,000 temporary workers within just the first year.

But not all have been able to reap the spoils of that historic deal. Hundreds of Stellantis workers have since found themselves out of a job, and the automaker has raised the possibility of additional layoffs as it absorbs the higher labor costs, shifts to building more electric vehicles and confronts economic uncertainty.

The job cuts — coming as shareholders approved a $39 million compensation package for CEO Carlos Tavares that made him the highest paid at the Detroit 3 — have outraged the union leaders who lauded the contract's riches last fall.

"Stellantis is pathetic," UAW President Shawn Fain told members on a Facebook broadcast April 23. "Honestly, the leadership is pathetic. You got a CEO over there across the pond that wants to talk about how they need to cut costs and all this stuff, but it didn't stop him from giving himself a 56 percent pay increase."

Fain spoke a day after Stellantis dismissed 199 full-time workers at its Ram 1500 plant in suburban Detroit. The company also said it would implement indefinite layoffs across its U.S. footprint in the months ahead to "help improve productivity and ensure the company's long-term sustainability in a rapidly changing global market."

The cost-cutting quest has affected more than just hourly workers and those in the U.S. Stellantis eliminated about 400 U.S. engineering, technology and software jobs in March and is seeking to reduce its Italian workforce by 8 percent. Meanwhile, the automaker is recruiting lower-paid engineers in countries such as Morocco, India and Brazil.

In another sign of the UAW's deteriorating relationship with Stellantis, it's threatening to strike a Detroit-area factory that supplies metal stampings to a half-dozen assembly plants. Workers at the stamping facility last week voted to authorize a walkout over working conditions such as rainwater leaking through the ceiling, oil leaks and a general lack of sanitation.

UAW Local 869 President Romaine McKinney told Automotive News there were no immediate plans for a strike and that "the opportunity to correct all the health and safety issues will definitely be given."

At the Ram 1500 plant a few miles away, UAW Local 1700 President Michael Spencer said Stellantis is putting "profits over people" with each round of layoffs.

"I find it disappointing, disgusting and a disservice to the employees who are currently employed and those employees who were released through mass termination from Stellantis since the ratification of the 2023 contract," Spencer, who represents most of the plant's 6,000 workers, said in an April 22 statement.

One highlight of the UAW's new contract with Stellantis was that the company agreed to give 3,200 temps full-time status within a year. Temps, which Stellantis calls supplemental employees, generally are used to fill in for absences or when a plant needs more workers for a short time.

The contract raised starting pay for those jobs to $21 an hour from $15.78 and bars the company from keeping workers in temporary status for more than nine months.

But the approach Stellantis has been using to comply with that commitment isn't what the union had in mind.

The company terminated 539 supplemental employees across the U.S. in January and 341 at its Jeep Wrangler plant in Toledo, Ohio, in March. The Detroit News reported that 239 temps were cut at a parts sequencing facility.

Art Wheaton, a labor relations expert at Cornell University, said he wasn't surprised to see Stellantis reduce the supplemental headcount with the new rollover requirements in place.

"One of the reasons they had the different tiers and they had the temps was to give them some flexibility," Wheaton told Automotive News. "From the union's perspective, the union always wants job security, and from the company's perspective, they always want flexibility. So if the temporaries are going to become permanent, it reduces the flexibility for the company. And they say, 'Gee, if I don't have to make them permanent, maybe we can just lay them off.'"

Wheaton said Stellantis is trying to "brace themselves for ever-changing market conditions," pointing to softening emissions guidelines that call for a less aggressive pace for carbon reduction for models coming at the end of the decade.

"If you're not sure if you're going to need everybody, you lay off those that you can so you don't have to pay him at the higher rate," he said. "That means the ones that they can get rid of, they're going to rid of."