Evan Vucci/AP Photo
President Joe Biden looks at a Jeep as he stands with Carlos Tavares, CEO of Stellantis, during a tour of the Detroit Auto Show, September 14, 2022, in Detroit.
Automaker Stellantis announced last Friday that it will shutter its Belvidere, Illinois, plant in February, laying off 1,350 workers.
The factory currently builds the Jeep Cherokee SUV. Tim Ferguson, shop chairman for United Auto Workers Local 1268, which represents Belvidere’s hourly workers, told the Prospect that it is widely known that production of the next line of Cherokees, which will include gas, hybrid, and all-electric models, will move to Stellantis’s plant in Toluca, Mexico. The news was confirmed by the plant manager and company documents, he said. In a statement to the Prospect, Stellantis declined to confirm any future production site.
The news comes as the UAW, which represents Stellantis workers, faces an existential battle for the growing electric-vehicle industry. That fight is playing out in factories, as workers push to organize new battery plants, and in the union’s internal politics during recent leadership elections.
A UAW reform caucus notched historic wins earlier this month, electing six candidates to officer positions in the union’s first-ever direct election. Challenger Shawn Fain will face current president Ray Curry in a runoff election next month, in a vote that will test the rank and file’s appetite for more aggressive action.
Also this month, workers at a battery producer in Ohio named Ultium Cells, jointly owned by Korea’s LG and General Motors, voted 710 to 16 in favor of joining the UAW. The White House touted this development with a statement from the president, who said that good-paying union jobs in the electric-vehicle industry “will bring our supply chains back home and tackle the climate crisis.”
But the factory idling in Belvidere is a bad signal for American workers eager to share in the future of automaking. And measures in the administration’s groundbreaking Inflation Reduction Act could be to blame.
In a statement on the plant idling, UAW Vice President Cindy Estrada said the union is “deeply angered by Stellantis’s decision.”
Several members told the Prospect that the decision could have been prevented if the UAW had taken action sooner. On Saturday, Fain argued on a Facebook live broadcast that leadership did not push hard enough to win new models for the plant.
During 2019 bargaining, it was well known that Belvidere needed to be allocated a new product, since workers were assembling an aging vehicle model. Ferguson, who was chair of the national bargaining committee, opposed a tentative agreement that failed to guarantee a product for Belvidere assembly, which was ultimately approved.
“The sad reality of this is, over the last year and a half, since President Curry’s been in power, and Vice President Estrada, the company has awarded more than three different products, and Belvidere could have had every one of those,” Fain said on the live stream. “They’ve had ample opportunity to take on the company and to get product there, and prevent thousands of layoffs.”
At this time last year, Stellantis was expected to give production of electric and hybrid Dodge Challenger and Charger cars to Belvidere. But earlier this year, the company announced that it would allocate the jobs to a plant in Ontario, Canada.
Measures in the administration’s groundbreaking Inflation Reduction Act could be to blame.
“The Canadian government did their thing, and obviously gave the company some money so that they were willing to leave those products up in Canada. And so far, nobody’s stepped up on our behalf here in Belvidere to try to keep our vehicle from going to Mexico,” said Ferguson, who is supporting Fain in the upcoming runoff.
The Biden administration has poured historic investments into the electric-vehicle market, and was willing to anger competitors such as South Korea and Germany with its record incentives for cars built in North America.
But after an initial version of Build Back Better proposed to limit tax credits to cars made by a unionized workforce in the United States, the final Inflation Reduction Act (IRA) broadened those credits to include vehicles assembled in Mexico and Canada.
“To me, that was a huge mistake,” Ferguson said. If the tax credits had been targeted exclusively at the United States, he said, “I believe that our vehicle would still be being built here.”
Mexico and Canada recently won a trade dispute with the U.S. over car parts manufactured across borders. The countries argued that under the USMCA, the bipartisan trade agreement that replaced the North American Free Trade Agreement (NAFTA), more regionally manufactured parts should be traded duty-free. The USMCA deal focuses heavily on vehicles, which are the top manufactured good traded by the U.S., Mexico, and Canada, making it a major constraint in IRA negotiations.
For its part, Stellantis blamed the factory relocation on the pandemic, the global chip shortage, and—most of all—the rising cost of producing electric cars. Inflation and the rising cost of raw materials have pushed up the cost of batteries. The company said in a statement on the idling that “the most impactful challenge is the increasing cost related to the electrification of the automotive market.”
The decision to idle Belvidere also comes as interest rates have surged more than 5 percent in less than a year. The pace of that change—rather than the nominal level—has slowed investment across numerous sectors. Many green investments are cheaper than alternatives once in use, but the energy transition requires high up-front capital expenditures.
Even so, the business climate has been good to Stellantis. The company’s third-quarter earnings this year were up 29 percent compared to last year, translating to double-digit profits for the auto conglomerate, which is based in Amsterdam.
The current period of high interest rates is unlikely to deter green investment over the long term. But for now, workers like Scott Houldieson, a UAW member electrician at Ford’s Chicago Assembly Plant, told the Prospect that factory shutterings have become too familiar.
“Here in Chicago, we have people from the Twin Cities plant in Minneapolis that closed, people from the St. Louis plant that closed, people from Wixom that closed,” he said. “When are we going to stop the bleeding?”
