Stellantis sells and closes large proving grounds amid cost cutting

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. Chrysler has since purchased the property for $35 million from… ford motor In 2007.

As of July 2019, operations employed 69 people, including workers represented by a local chapter of the United Workers Union, According to the automaker.

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 has opened its operations, which are expensive to maintain, to other companies For use in 2021.

Stellantis confirmed the closure Friday morning, citing the company's ongoing cost cuts and real estate appraisals.

“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, 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 established The company notified the UAW It was likely locked 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, but local and international politicians, including… Michigan Governor Gretchen Whitmerexpressed concerns that Stellantis may move to close the 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 The company has moved to employ the majority of its engineering workforce in those countries, where the cost per employee is roughly 50,000 euros ($53,000) or less per year — far less than similar positions in the United States and Europe.