Stellantis (STLA) , the 14-brand auto giant and parent company of well-known American auto brands Chrysler, Dodge, Jeep, and Ram Trucks, is not doing so well.
Since reporting dismal first-half 2024 earnings in July, the automaker has been taking extreme cost-cutting measures to save as much as possible and doing the most to boost sales and reduce its overflowing inventories at its U.S. dealerships.
💰💸 Don’t miss the move: SIGN UP for TheStreet’s FREE Daily newsletter 💰💸
Recently, it has had to lay off about 1,100 factory workers and sell one of its research and development facilities.
However, while all this is happening, the automaker has been feuding with the United Auto Workers union over agreements made in its landmark contract signed in November 2023, which has gotten the attention of higher powers.
Hill lawmakers chime in on UAW-Stellantis
Related: Jeep parent Stellantis is making huge sacrifices to save a few bucks
In a show of support, 79 members of Congress sent letters to Stellantis and its CEO, Carlos Tavares, urging the automaker to honor the commitments it made with the United Auto Workers.
The basis of the letters regarded the agreed-upon $1.5 billion investment to reopen the automaker's shuttered assembly plant in Belvidere, Illinois. The union argues that its inaction on Belvedere is evidence that it is not staying committed to the agreement, even though the automaker has insisted on multiple instances that it is.
In two separate letters sent on Wednesday, 56 members of the House of Representatives and 23 members of the Senate, including Senate Majority Leader Chuck Schumer (D-NY), argued that the delay of the Illinois plant and other reported decisions, such as a reported move of Dodge Durango production overseas, violated their agreement.
More Automotive:
- The Buick Envista is America's wake-up call for Chinese cars
- Ford CEO says he's sick and tired of making 'boring' cars
- New study reveals a cold, harsh truth for thrifty new car buyers
Further, the Senators also pointed out that Stellantis is slated to receive $335 million in public money to reopen Belvedere, establishing that there should be no excuse for such a delay. Additionally, the lawmakers blasted Stellantis for layoffs at facilities like Sterling Heights.
“Stellantis’ reliance on taxpayer support, while planning layoffs and moving production outside of the United States, betrays the trust of American workers and taxpayers,” the letter said.
In their letter to Stellantis's board of directors, House members further criticized the automaker for using a clause in its UAW contract that allows it to use worsening market conditions to delay financial commitments it had already made.
"Stellantis's recent attempt to justify delays in its contractually mandated investment and production commitments did nothing to assuage our concerns," the letter said. "Stellantis appears resolved to claim market conditions prevent you from honoring these commitments."
Stellantis defends its decisions
The letters from Capitol Hill come after Stellantis's recent barrage of legal action over the UAW's allegations.
On Oct. 7, Stellantis announced that it filed eight additional lawsuits against the UAW and 23 of its local chapters just a day after it filed a suit against the UAW and UAW Local 230 in federal court over the allegations. They said it was not in violation of the contract.
In its original suit, filed on Oct. 3 in the U.S. District Court in the Central District of California, Stellantis claims that the UAW "filed sham grievances designed to justify mid-contract strikes against Stellantis" that would violate the no-strike clause in its bargaining agreement.
"Ignoring this negotiated-for and mutually agreed-upon language in Letter 311 [Stellantis's name for the agreement], the UAW and its agents, including President Shawn Fain, have embarked on a sustained, multi-month campaign against the Company to force the planned investments without Company approval and regardless of business factors," it read.
Related: Stellantis is taking the UAW to Federal court over latest threat
In a statement to TheStreet, a representative for Stellantis said that no plans have been made about the decision to move production of the Dodge Durango.
The automaker also emphasized that it has "repeatedly stated that it has abided by and will continue to abide by the 2023 collective bargaining agreement" and that "it is in everyone’s best interest to have a healthy, sustainable company that can compete in a global marketplace."
"There is indisputable volatility in the market related to the transition to an electrified future, which the signers of these letters support. Over the past year, numerous companies across the industry have announced investment and product delays as well as outright product cancelations," Stellantis said.
"The company has confirmed a delay – not a cancellation – of the plans for the Belvidere plant allocations. This decision is consistent with the current challenging automotive landscape and the plain language in the contract that the UAW agreed to."
Stellantis NV, which trades on the New York Stock Exchange as STLA, is up 2.52% from the opening bell, trading at $13.64 per share at the time of writing.
Related: Veteran fund manager sees world of pain coming for stocks
