In a move that could further exacerbate tensions with the United Auto Workers (UAW), Stellantis NV, the parent company of iconic brands like Ram, Jeep, Dodge, and Chrysler, is expanding its production of Ram 1500 pickup trucks in Mexico.
The Wall Street Journal, citing sources familiar with the matter, reported that Stellantis plans to expand its factory complex in northern Mexico to manufacture the popular Ram 1500. This decision comes as a blow to the UAW, who have been vocal about the potential loss of U.S.-based jobs.
While Stellantis has stated that Ram trucks will continue to be produced at its Sterling Heights assembly plant north of Detroit, the move to Mexico has raised alarm bells within the union. The company has also announced a $235 million investment in the Michigan factory to build future electric versions of the Ram 1500.
This expansion plan comes on the heels of a significant labor agreement Stellantis signed with the UAW last year, which promised billions in U.S. investment and substantial pay increases for union members. The move to Mexico could potentially increase labor costs for Stellantis and its competitors, prompting them to shift some factory work outside the U.S.
“There’s fear across the board,” said Kevin Gotinsky, UAW’s lead bargainer for Stellantis, at a recent union rally in suburban Detroit. “The shift is everything out of this country.”
This decision to expand production in Mexico comes at a time when Stellantis faces several challenges. The company has been grappling with downward pricing pressure and inventory issues, leading to a stock downgrade by RBC Capital analyst Tom Narayan. Narayan believes that resolving inventory issues without sacrificing prices could help Stellantis rebound its margins.
Adding to these challenges, Stellantis is also dealing with a recall of over 129,000 Ram 1500 trucks due to a malfunctioning turn signal feature, which increases the risk of accidents. This recall further complicates Stellantis’ efforts to maintain its market position.
The company also reported a 20% decline in U.S. sales in the third quarter of 2024, further highlighting its financial struggles. Stellantis has also been facing challenges in the European electric vehicle market, with its stock down significantly over the past year. This decline is exemplified by the halt in Fiat 500e production due to weak demand.
The decision to expand Ram 1500 production in Mexico is likely to further strain the relationship between Stellantis and the UAW. It remains to be seen how this move will impact the future of U.S. manufacturing jobs and the overall automotive industry.