Jeep Plant Shutdown Imperils Illinois Town and 1,350 Workers
The Jeep Cherokee was a strong seller just a few years ago. In 2019, a plant in Belvidere, Ill., produced about 190,000 of the sport utility vehicles, employing close to 5,000 people and operating three shifts a day.
Since then, sales have fallen. The factory laid off the third shift, and then the second. This year it is on track to make fewer than 20,000 vehicles.
Even so, it was a shock when the manufacturer, Stellantis, announced this month that the 57-year-old plant would shut down indefinitely at the end of February, putting 1,350 people out of work. And there is fear across the area, an hour’s drive west of Chicago, that “indefinitely” could mean forever.
Shane Mathison, a line operator who has worked at the Belvidere plant since 2006, said the news hit hard at home, especially for his wife. “She’s freaking out,” he said. “She’s scared to death. But I told her, we’ll make ends meet. If I have to wash dishes at two different places, I will. I have to do what I have to do for the family.”
The prospective shutdown is a fresh sign of upheaval in the American auto industry. Beyond threatening economic pain locally, it adds a contentious element to looming labor negotiations with the company and a hard-fought leadership race in the United Auto Workers union.
Sales of the Jeep Cherokee, a midsize sport utility vehicle, have been slowed by the shortage of computer chips that has hindered auto production around the world for the last two years. Several times Stellantis has halted Cherokee production to divert the chips it had to larger, more profitable vehicles such as the Grand Cherokee and trucks like the Ram pickup.
The Cherokee is also in a crowded, highly competitive segment, and is an aging model. It had its last major redesign in 2014. By contrast, new versions of the Chevrolet Equinox, Ford Escape and Toyota RAV4 have all been introduced in the last four years. An updated Honda CR-V arrived this summer.
At the same time, the auto industry is investing billions of dollars to transition to electric vehicles, one of the most fundamental shifts in the industry in more than 100 years. A half dozen automakers are building battery plants in Georgia, North Carolina, Michigan, Tennessee and Kentucky. Computer chip producers, moving in part to meet the automotive demand, plan new plants in Ohio, Michigan, New York and Arizona, with the help of subsidies under the CHIPS and Science Act, passed by Congress in July.
For now, the northwestern corner of Illinois is bracing for the impact of the idling of the plant, the largest employer in Belvidere, which has a population of 25,000. At Buchanan Street Pub, Jim Edwards, the bar manager, fretted at the notion.
“It’s been affecting us,” he said. “You don’t have that second and third shift coming by anymore. Most of the workers live here in Belvidere. It’s going to be a ghost town.”
The Rise of Electric Vehicles
- Battery Recycling: As sales of electric cars and trucks take off, the race is on to recycle used lithium-ion batteries — but few will be available to reuse for a decade or more.
- Mail Trucks: In a win for the Biden administration, the United States Postal Service said it would spend nearly $10 billion to create one of the largest electric truck fleets in the nation.
- Going Mainstream: U.S. sales of battery-powered cars jumped 70 percent in the first nine months of the year, as non-affluent buyers are choosing electric vehicles to save money on gas.
- A Bonanza for Red States: No Republican in Congress voted for the Inflation Reduction Act. But their states will greatly benefit from the investments in electric vehicles spurred by the law.
The factory is also an important economic engine for a wider area. “There’s always a big hole left when a plant closes,” said Tom McNamara, mayor of Rockford, a city of 147,000 just west of Belvidere. “Auto assembly is a big jobs multiplier. When the plant closes, there are a lot of suppliers and other businesses that will be affected.”
Stellantis, formed two years ago through the merger of Fiat Chrysler and France’s Peugeot, is solidly profitable, having reported 8 billion euros ($8.5 billion) in net income for the first half of the year. But it is also spending heavily to catch up to Tesla, General Motors and Ford Motor in E.V.s. The company said this year it would invest $2.5 billion to build a battery plant of its own in Indiana.
“Our 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,” Stellantis said in a statement.
Kristin Dziczek, a policy adviser at the Federal Reserve Bank of Chicago who focuses on the auto industry, said Stellantis was encountering a challenge other automakers will face as they ramp up production of E.V.s and sales of conventional models decline.
“It’s tough,” she said. Keeping plants operating at full capacity “has been hard while companies to have to put out a lot of money for the shift to E.V.s.”
Earlier this year, it seemed the Belvidere plant might become a key part of the company’s strategy. It was in the running to produce battery-powered cars, but Stellantis chose to retool a plant in Brampton, Ontario, instead.
Stellantis said it planned to try to transfer Belvidere workers into positions at other plants that have openings.
Matt Frantzen, a 48-year-old father of five who has worked at the plant since 1994, said he would most likely have to take a transfer to another Stellantis location because he needed to work about another year before he could retire with full benefits.
“It may be Ohio,” he said. “It may be Michigan. But wherever it is, I’m so far invested, I have to go. I’ll leave my family in Belvidere, and I’ll go do my job until retirement. Then I’ll come home and look for new work.”
Eric Fulton, a 25-year employee who works in the plant’s paint reprocess department, said many Belvidere workers had been through downsizing in the past.
“A large portion of employees are transfers already, so we are numb to having to do it again,” he said. “It is very sad, but again, this is the norm that most of us are used to.”
The U.A.W., which is heading into contract negotiations with Stellantis next year, will push the company to keep Belvidere open and assign new models to the plant.
“A plant can’t be permanently shuttered without the buy-in from the U.A.W.,” Ms. Dziczek said. “So this is a really significant round of talks coming up.”
The Detroit automakers have idled plants ahead of past contract negotiations, only to reopen them after bargaining with the union. In 2019, G.M. was winding down production at its Hamtramck plant in Detroit as contract talks began, and ended up agreeing to produce the first of its new generation of electric vehicles there.
In those same talks, however, G.M. closed its plant in Lordstown, Ohio, and resisted the union’s efforts to reopen it. While the Lordstown plant was sold, G.M. built a new battery plant a mile away. Workers at the battery plant this month voted overwhelmingly in favor of U.A.W. representation.
The president of the U.A.W., Ray Curry, said in an interview that he had been having discussions since August with Stellantis’s chief executive, Carlos Tavares, as well as officials of the Biden administration and the Illinois governor’s office in a push to keep the Belvidere plant alive.
“The corporation is looking at scenarios for putting product in Belvidere,” he said, “and I can tell you the governor has not given up, I have not given up, and we are all advocating for the survival of that plant.”
The plant is certain to become a key topic next year when the U.A.W. membership chooses a president. Mr. Curry finished slightly ahead of a reform candidate, Shawn Fain, in a field of five presidential candidates in a November election. Mr. Curry and Mr. Fain will face each other in a runoff early next year.
Mr. Fain said he would push Stellantis hard to assign new models to be built in Belvidere and preserve jobs. In the past, he said, U.A.W. leaders have been too willing to accept wage, benefit and job concessions sought by Ford, G.M. and Stellantis.
“These companies have had near-record profits for 10 years now,” he said in an interview. “You have workers who’ve worked their butts off and have done their part.”
Even if the U.A.W. is able to negotiate a future for the Belvidere plant, it will probably remain idle long enough to force some workers to retire, transfer or move on to new jobs.
Mr. Mathison, the union line operator at Belvidere, may be one of them. He said he planned to look into going back to school to become a certified nursing assistant because a transfer to another state would be difficult.
“I have three kids,” he said. “Both my mom and dad are up there in age. I can’t move. I’m basically going to have to start over at 47.”