Jeep maker Stellantis NV said on Friday that it would stop operations at a 1,350-employee assembly plant in Illinois, citing the need to control costs in the face of supply-chain disruptions and high expenses associated with moving to electric vehicles.
The Netherlands-based global auto maker said that its factory in Belvidere, Illinois, which makes the Jeep Cherokee sport-utility vehicle, would be idled effective Feb. 28 and result in indefinite layoffs.
The company said it is looking at different uses for the plant and would try to place laid-off employees in full-time positions elsewhere.
Stellantis said the company and industry have been hurt by the semiconductor shortage and Covid-19-related disruptions.
"But the most impactful challenge is the increasing cost related to the electrification of the automotive market," it said.
The move to stop operations at the factory, which was built in the 1960s, comes ahead of next year's negotiations with the United Auto Workers on a new four-year labor contract.
The UAW on Friday criticized Stellantis' decision to stop work at the Illinois facility and urged the auto maker to move a different vehicle program to the plant, including potentially building electric cars there.
"Not allocating new product to plants like Belvidere is unacceptable," UAW president Ray Curry said in a statement.
Stellantis, formed through the merger of France's PSA Group and Fiat Chrysler Automobiles NV in 2021, has ambitious targets for EVs, pledging to spend $35 billion in coming years on new models and manufacturing capabilities.
The company has said it aims to have electric vehicles represent half of its sales in North America by the end of the decade.
The parent of Jeep, Chrysler, and Dodge brands, Stellantis said it would continue to build the Cherokee at the plant until work ceases in February. It wouldn't comment on the future of the midsize SUV.
The decision to idle the plant comes as the auto industry confronts an uncertain economic outlook, while also continuing to battle supply-chain snags that have disrupted production for the past two years.
At the same time, car makers are under pressure from investors and regulators to steer more money into the development of electric vehicles.
Some manufacturers have been cutting workers in response to those pressures, even as profits have been robust during the past few years of low inventory and high prices for new cars and trucks.
Ford Motor Co. this summer laid off about 3,000 white-collar and contract employees. Stellantis in October offered buyouts to salaried workers in the U.S.
Still, plant closures in the U.S. auto industry have been rare since 2008-2009, when General Motors Co., Ford and the former Chrysler Corp. closed many factories amid a severe downturn in car sales, helping to push GM and Chrysler into bankruptcy.
The last large factory to close was a GM assembly plant in Lordstown, Ohio, in 2019.
That move angered UAW officials ahead of contract talks that year and contributed to a 40-day strike at GM's U.S. factories in late 2019, which drained about $3.5 billion from the auto maker's bottom line.
