Maker of Electric Jeep Vehicles Closing Illinois Plant and Moving to Mexico

Posted originally on the CTH on December 11, 2022 | Sundance 

Stellantis is a multinational automaker contracted for the electric version of the Jeep Cherokee.  Citing high costs to produce electric vehicles, on Friday Stellantis announced a decision to idle the Belvedere, Illinois plant starting on Feb. 28, 2023, and notified 1,350 workers of the layoffs.

(Via Fox) […] “This difficult but necessary action will result in indefinite layoffs, which are expected to exceed six months and may constitute a job loss under the Worker Adjustment and Retraining Notification (WARN) Act. As a result, WARN notices have been issued to both hourly and salaried employees,” it said. “The company will make every effort to place indefinitely laid off employees in open full-time positions as they become available.”

Today The Daily Mail is reporting that production of the electric Jeep will take place in Mexico.

Hundreds of workers are expected to be laid off when automaker Stellantis closes an assembly plant in northern Illinois early next year, citing the challenge of rising costs of electric vehicle production.

The company, which employs about 1,350 workers at the plant in Belvidere, Illinois, said the action will result in indefinite layoffs and it may not resume operations as it considers other options. 

Stellantis said the industry ‘has been adversely affected by a multitude of factors like the ongoing COVID-19 pandemic and the global microchip shortage, but the most impactful challenge is the increasing cost related to the electrification of the automotive market.’

The Belvidere plant, produces the Jeep Cherokee SUV, will be idle starting on February 28, 2023, Stellantis said. The plant in Toluca, Mexico will now produce the vehicles. (read more)

One aspect of this move that deserves additional attention is the U.S. and Canada focus on new energy policy, against the backdrop of Mexico telling the Biden administration the USMCA partner was going to continue development of traditional oil, coal and natural gas energy production.

Should Mexico continue to maintain a more traditional energy policy, they will likely create a greater cost incentive for all manufacturers.  With electricity rates skyrocketing in the U.S. and Canada, any energy dependent manufacturer would see an additional advantage to production in Mexico.

It will be worthwhile watching this dynamic closely and seeing what type of pressure the Biden administration will apply to Mexican President Andres Manuel Lopez-Obrador to fall in line.

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