The last couple of years have been a roller coaster ride at Big Three automaker Stellantis in Auburn Hills, but that ride may be reaching its terminus.
Despite scoring billions of dollars in Michigan taxpayer-funded government subsidies, the company is rumored to be on the verge of yet another round of layoffs and cuts that could mean an eventual exit from the state.
WDIV reported Thursday that a cost-cutting effort at the automaker may result in job cuts in Auburn Hills.
“We have at least two plants that need a significant turnaround, at least two,” CEO Carlos Tavares said.
According to Mackinac Center for Public Policy Fiscal Policy Director James Hohman, the automaker has been a major beneficiary of government subsidies. In a phone conversation with The Midwesterner, Hohman said Stellantis was offered $2,059,000,000 from Michigan taxpayers. This includes a $2 billion financial package that was approved during the Great Recession and expires in 2029, he said.
Politicians brag that such giveaways either attract or keep businesses in Michigan, and that such schemes create high-paying jobs.
Hohman added that Stellantis also received $105 million from the state’s Good Jobs Program and millions of dollars more from other state incentive programs. The total amount pocketed by the company is unknown and non-disclosable, he added.
WDIV said Tavares has pledged to cut 30% of the company’s costs.
“So, he’s going after the company with an axe right now to get costs down,” auto analyst John McElroy told WDIV. “The old Chrysler Group as we know it in Auburn Hills is going to be a mere shadow of itself in just a couple of years.”
As for the Stellantis North American HQ in Auburn Hills, McElroy told WDIV it will likely be sold. “Stellantis doesn’t need all that office space anymore,” he said.
McElroy predicted to WDIV that the Michigan job losses are “likely to be significant.”
The company sought and received concessions that included selling the HQ from the United Auto Workers last year.
Earlier this week, the company announced it was recalling 1.2 million vehicles to fix a faulty rear camera. That recall was preceded in March, when 285,000 Chrysler and Dodge sedans were recalled because of a potential for explosions in the vehicles’ side-door air bags.
Last month, the Detroit News reported that sales of Stellantis vehicles dropped 10% in the first quarter of 2024. Additionally, the newspaper noted inventory of Stellantis cars and trucks idled on dealership lots for 98 days compared to the 52-day industry average.
“They sell expensive products,” Edmunds.com analyst Ivan Drury told the News. “Virtually everything in their lineup is expensive. Stellantis has kind of come to a strange place where the market has changed a lot, and they haven’t.”
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In January, Stellantis laid off 539 temporary workers nationwide. Last December, the company sought buyouts from 6,400 salaried employees, approximately half of its non-union workforce.
John Mozena, president of the Center for Economic Accountability, a nonprofit organization advocating for transparent economic development policy, opposes public funding of private companies.
He has also stated that the state should rely less on the auto industry.
“It wasn’t that long ago that Michigan was going through a single-state recession thanks to its reliance on the auto industry; the rational response would seem to be to try to encourage as much diversity as possible in the state’s economy to avoid a repeat of that rather than trying even harder to tie the state to the auto industry’s uncertain future,” Mozena told The Center Square last December.
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“Instead of doubling down on the idea that there’s something magical about manufacturing jobs that makes them worth hundreds of thousands of taxpayer dollars per job, Michigan should instead focus on creating a business environment that’s conducive to every kind of company, with special care paid to making it easy to create and grow startup businesses,” he said.