Carlos Tavares, CEO of Stellantis NV, speaks to the media at the Stellantis automobile manufacturing plant in Sochaux, France, on Thursday, October 3, 2024.
Nathan Lane | Bloomberg | Getty Images
Detroit – automaker Stellantis CNBC has learned that the company plans to close and sell its large vehicle testing fields in Arizona at the end of this year.
The decision is the latest cost-cutting measure by the transatlantic automaker under CEO Carlos Tavares, who is under increasing pressure from Wall Street, dealers and the United Auto Workers union amid the company's lagging financial performance, layoffs and sweeping labor decisions.
The Arizona Proving Grounds cover 4,000 acres between Phoenix and Las Vegas in Yucca, Arizona. It has been used to test and develop vehicles for the automaker since Chrysler purchased the property for $35 million from ford motor In 2007.
The closure was confirmed by three people familiar with the plans who agreed to speak on condition of anonymity because the matters are private.
Stellantis plans to use testing grounds in Arizona owned by the company toyota motor Starting next year, according to two people familiar with the decision. Toyota opened its operations, which are expensive to maintain, for use by other companies in 2021.
Stellantis Chrysler Arizona Proving Ground
Source: Google Earth
Stellantis confirmed the closure Friday morning, citing the company's ongoing cost cuts and real estate valuations.
“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 email statement.
The automaker also said it is “working with the UAW to offer special packages to ground employees or they can choose to continue their work in relocating operations” but employees could be placed on “an indefinite layoff, which will entitle them 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 chapter of the UAW.
The UAW, which has been increasingly critical of Tavares and these layoffs, did not respond for comment on the planned closure.
Stellantis, like most automakers, has several test areas in different climates and geographies to develop and test vehicles before selling them to consumers. Stellantis's 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 last year's union contract negotiations with Stellantis.
The majority of 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 metro Detroit that had previously been used as Chrysler's global headquarters.
The status of the other properties was not immediately clear, however, and local and state politicians, including Michigan Governor Gretchen Whitmer, have expressed concerns that Stellantis may move to close its former headquarters in Auburn Hills, Michigan.
Stellantis has significantly reduced its US headcount in recent years amid cost-cutting measures taken by Tavares.
Stellantis 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 filings. This does not include further staff cuts and layoffs this year.
The automaker had only about 11,000 U.S. employees at the end of last year. This compares to 53,000 in GM And 28,000 in Ford.
The cuts occurred when Stellantis tried to outsource many of its engineering efforts to low-cost countries such as Brazil, India and Mexico, according to several people familiar with the moves.
Bloomberg News reported earlier this year that Stellantis had moved to employ the majority of its engineering workforce in those countries, where the cost per employee is about 50,000 euros ($53,000) or less per year — far less than similar jobs in the U.S. And Europe.
