Carlos Tavares, CEO of Stellantis NV, speaks to the media at the Stellantis automobile plant in Sochaux, France, on Thursday, October 3, 2024.
Nathan Laine | Bloomberg | Getty Images
DETROIT – Automaker Stellar The company plans to close and sell its large vehicle testing site in Arizona at the end of this year, CNBC has learned.
The decision is the latest cost-cutting move 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 declining financial performance, layoffs and general business decisions.
The Arizona Proving Grounds spans 4,000 acres between Phoenix and Las Vegas in Yucca, Arizona. Since then, it has been used for vehicle testing and development for the automaker – Chrysler bought the property for $35 million from Ford engine in 2007.
The closure was confirmed by three people familiar with the plans, who agreed to speak on condition of anonymity because the matter is private.
Stellantis plans to use a testing site in Arizona owned by Toyota engine Implementation will begin 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 Grounds
Source: Google Earth
Stellantis confirmed the closure Friday morning, citing the company's ongoing cost reductions and real estate valuations.
“Stellantis continues to seek opportunities to increase efficiency and optimize its footprint to ensure future competitiveness in today’s rapidly changing global marketplace,” the company said in an emailed statement.
The automaker also said that it is “working with the UAW to offer special packages to the proving ground employees, or they may elect to continue their work as part of an operational shift,” but that the employees “could be laid off indefinitely, whichever is the case.” “They would be entitled to pay and benefits for two years.”
Stellantis said there are currently 41 employees working at the Arizona Proving Grounds, including 37 hourly workers represented by a local chapter of the UAW.
The UAW, which has become increasingly critical of Tavares and such layoffs, did not respond to a request for comment on the planned closure.
Stellantis, like most automakers, has multiple test sites in different climates and regions to develop and test vehicles before selling them to consumers. Stellantis' other major U.S. test site is a 4,000-acre campus west of Detroit in Chelsea, Michigan.
The Stellantis complex in Arizona was one of 18 facilities the company told the UAW it might close during the union's contract negotiations with Stellantis last year.
Much of the other operations were parts and distribution centers that would be consolidated into “mega-sites,” as well as the company's massive 500-acre Detroit-area campus, which formerly served as Chrysler's world headquarters.
The status of the other properties was not immediately clear, but local and state politicians, including Michigan Gov. Gretchen Whitmer, expressed concerns that Stellantis could prompt the closure of its former headquarters in Auburn Hills, Michigan.
Stellantis has significantly reduced the number of its U.S. employees in recent years as part of Tavares' cost-cutting measures.
According to public filings, 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. This does not include further staff reductions and layoffs this year.
The automaker only had about 11,000 U.S. employees at the end of last year. In comparison there were 53,000 General Motors and 28,000 at Ford.
The cuts came as Stellantis has sought to outsource much of its engineering work to lower-cost countries such as Brazil, India and Mexico, according to several people familiar with the moves.
Bloomberg News reported earlier this year that Stellantis has moved to recruit much of its engineering workforce in countries where the cost per employee is about €50,000 ($53,000) or less per year – far less than comparable positions in the USA and Europe.
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