Stellantis, the world's third-largest automaker, announced plans to shut down and sell its large vehicle testing facility in Arizona by the end of this year. This move is part of CEO Carlos Tavares' strategy to cut costs amid financial challenges, workforce reductions, and increasing pressure from Wall Street, dealers, and the United Auto Workers (UAW).
The closure of the 4,000-acre Arizona site, which Stellantis purchased from Ford in 2007, is aligned with the company's ongoing efforts to streamline operations and assess its real estate holdings. Stellantis stated that the decision is to enhance efficiency and optimize business layouts to remain competitive in the swiftly evolving global market.
Stellantis has collaborated with the UAW to offer special compensation packages to the Arizona testing ground employees or opportunities for relocation to other operational sites. The facility employed 69 workers, represented by a local UAW branch, as of July 2019.
Reports suggest that Stellantis plans to utilize Toyota's Arizona testing facility, which opened for external use in 2021, from next year. Like many automakers, Stellantis operates multiple testing sites across various climates and geographies to develop and test vehicles before market release. Their other primary U.S. test facility is located in Chelsea, Michigan.
The Arizona testing facility was one of 18 sites potentially marked for closure as part of last year's contract negotiations with UAW. Stellantis aims to consolidate other operations, such as parts distribution centers, into 'super sites,' but the status of these properties remains uncertain. Michigan Governor Gretchen Whitmer and other officials have voiced concerns about a potential shutdown of Stellantis' headquarters in Michigan.
Under Tavares' leadership, Stellantis has significantly reduced its U.S. workforce. From December 2019 to the end of 2023, the company cut 15.5% of its employees, approximately 47,500, with a 14.5% reduction in North America. These figures exclude additional layoffs anticipated this year.
By the end of last year, Stellantis' white-collar workforce in the U.S. numbered around 11,000, compared to General Motors' 53,000 and Ford's 28,000. Stellantis has been outsourcing engineering work to countries like Brazil, India, and Mexico, where labor costs are substantially lower, approximately €50,000 ($53,000) annually or less, compared to similar positions in the U.S. and Europe.
