Carlos Tavares, CEO of Stellantis NV, speaks to the media at the Stellantis automobile manufacturing plant in Sochaux, France, Thursday, October 3, 2024.
Natan Laine | Bloomberg | fake images
DETROIT – Automobile Manufacturer stellantis plans to close and sell its large vehicle proving ground in Arizona later this year, CNBC has learned.
The decision is the latest cost-cutting measure taken by the transatlantic automaker under CEO Carlos Tavares, who has been increasingly under pressure from Wall Street, dealers and the United Auto Workers union amid the lagging financial performance, layoffs and overall business decisions of the company.
Arizona Proving Grounds covers 4,000 acres between Phoenix and Las Vegas in Yucca, Arizona. It has been used for vehicle testing and development for the automaker ever since: Chrysler purchased the property for $35 million from Ford engine in 2007.
The closure was confirmed by three people familiar with the plans who agreed to speak on condition of anonymity because the matter is private.
Stellantis plans to use a testing range in Arizona owned by ToyotaEngine starting next year, according to two people familiar with the decision. Toyota opened its operations, which are expensive to maintain, for other companies to use in 2021.
Stellantis Chrysler Arizona Proving Ground
Source: Google Earth
Stellantis confirmed the closure Friday morning, citing continued cost reductions and the company's real estate evaluations.
“Stellantis continues to seek opportunities to improve efficiency and optimize its footprint to ensure future competitiveness in today's rapidly changing global marketplace,” the company said in an emailed statement.
The automaker also said it is “working with the UAW to offer proving ground employees special packages or they may choose to continue their work in a transfer of operations,” but that employees could be placed on a “layoff.” indefinite, which would give them the right to pay and benefits for two years.”
Stellantis said 41 employees currently work at Arizona Proving Grounds, including 37 hourly workers represented by a local UAW chapter.
The UAW, which has been increasingly critical of Tavares and those layoffs, did not respond for comment on the planned closure.
Stellantis, like most automakers, has several proving grounds in different climates and geographies to develop and test vehicles before selling them to consumers. Stellantis' other major facility in the United States is a 4,000-acre campus located west of Detroit in Chelsea, Michigan.
The Stellantis complex in Arizona was one of 18 facilities the company notified the UAW it might close during the union's contract negotiations with Stellantis last year.
Most of the other operations were parts and distribution centers that were expected to be consolidated into “mega sites,” as well as the company's massive 500-acre campus in metropolitan Detroit, formerly used as Chrysler's world headquarters.
The status of the other properties was not immediately clear; However, local and state politicians, including Michigan Governor Gretchen Whitmer, have expressed concern that Stellantis may close the former headquarters in Auburn Hills, Michigan.
Stellantis has significantly reduced the number of its US employees in recent years amid Tavares' cost-cutting measures.
Stellantis has reduced headcount by 15.5%, or approximately 47,500 employees, between December 2019 and the end of 2023, including a 14.5% reduction in North America, according to public documents. That doesn't include any more staff reductions or layoffs this year.
The automaker had only about 11,000 salaried employees in the United States at the end of last year. That compared to 53,000 in general motors and 28,000 at Ford.
The reductions came as Stellantis sought to outsource many engineering efforts to lower-cost countries such as Brazil, India and Mexico, according to several people familiar with the moves.
Bloomberg News reported earlier this year that Stellantis shifted to hiring the majority of its engineering workforce in those countries, where the cost per employee amounts to approximately 50,000 euros ($53,000) or less per year, much less than similar positions. in the United States and Europe.
