Jeep Plant Shutdown Imperils Illinois Town and 1,350 workers

Belvedere, Illinois — The Jeep Cherokee was a solid seller just a few years ago. In 2019, a plant in Belvidere produced about 190,000 SUVs, employed nearly 5,000 people and worked three shifts a day.

Since then, sales have plummeted. The plant laid off the third shift, then the second. This year it is on track to produce fewer than 20,000 vehicles.

However, it was a shock when the manufacturer, Stellantis, announced this month that the 57-year-old plant would close indefinitely at the end of February, putting 1,350 people out of work. And there is fear throughout the area, an hour’s drive west of Chicago, that “indefinite” might mean forever.

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The news hit home hard, especially for his wife, said Shane Mathison, a lineman who has worked at the Belvidere plant since 2006. He said, “It’s scary.” “She’s scared to death. But I told her we’ll get by. If I have to wash the dishes in two different places, I’ll do it. I gotta do what I gotta do for the family.”

The upcoming shutdown is another sign of turmoil in the US auto industry. In addition to the threat of economic pain domestically, it adds a contentious element to the looming labor negotiations with the company and the tough leadership race in the United Auto Workers union.

Sales of the Jeep Cherokee, a midsize SUV, have slowed because of a computer chip shortage that has hampered vehicle production around the world for the past two years. Stellantis has stopped production of the Cherokee several times to turn the chips they had into bigger, more profitable cars like the Grand Cherokee and trucks like the Ram Pickup.

The Cherokee is also in a very busy and competitive segment, and is an older model. Its last restyling took place in 2014. By contrast, new versions of the Chevrolet Equinox, Ford Escape and Toyota Rav4 have been introduced in the past four years. The updated Honda CR-V arrived this summer.

At the same time, the auto industry is investing billions of dollars to transition to electric vehicles, which has been one of the fundamental shifts in the industry for more than 100 years. Half a dozen automakers are building battery plants in Georgia, North Carolina, Michigan, Tennessee and Kentucky. Computer chip producers, moving in part to meet auto demand, are planning new plants in Ohio, Michigan, New York and Arizona, with the help of subsidies under the CHIPS and Science Act, which Congress passed in July.

Right now, the northwest corner of Illinois is bracing for the effects of idleness at The Factory, the largest employer in Belvidere, population 25,000. At the Buchanan Street tavern, Jim Edwards, the bar manager, was wary of the idea.

“It affected us,” he said. “You don’t have that second and third shift coming in anymore. Most of the workers live here in Belvedere. It’s going to be a ghost town.”

The plant is also an important economic engine for the wider region. “There is always a big hole when a plant closes,” said Tom McNamara, mayor of Rockford, a city of 147,000 west of Belvedere. “Automated assembly is a multiplier for large jobs. When a factory closes, there are a lot of suppliers and other companies that will be affected.”

Stellantis, which was formed two years ago through the merger of Fiat Chrysler and France’s Peugeot, is making solid profits, reporting 8 billion euros ($8.5 billion) in net income for the first half of the year. But it’s also spending heavily to catch up with Tesla, General Motors and Ford Motor in electric vehicles. This year, the company said it would invest $2.5 billion to build its own battery factory in Indiana.

“Our industry has been negatively affected by many factors such as the ongoing COVID-19 pandemic and global microchip shortage, but the most impactful challenge is the increasing cost related to electrification of the automotive market,” Stellantis said in a statement.

Stellantis was facing a challenge that other automakers will face as they ramp up production of electric vehicles and sales of traditional models decline, said Kristin Dziczek, a policy advisor at the Federal Reserve Bank of Chicago who focuses on the auto industry.

“It’s hard,” she said. Keeping factories running at full capacity “was challenging when companies have to spend a lot of money to switch to electric vehicles.”

Earlier this year, it looked like the Belvidere plant might become a core part of the company’s strategy. It was in the process of producing battery-powered cars, but Stellantis chose to retool a factory in Brampton, Ontario, instead.

Stellantis said it plans to try to move Belvidere workers to jobs at other plants with openings.

Matt Frantzen, 48, a father of five who has worked at the plant since 1994, said he would likely have to move to another Stellantis location because he needed to work another year before he could retire on full benefits.

It might be Ohio, he said. “It might be Michigan. But wherever it is, I’m invested yet, and I have to go. I’ll leave my family in Belvedere, and I’ll do my job until retirement. Then I’ll go home and find a new job.”

Many Belvidere workers have experienced downsizing in the past, said Eric Fulton, a 25-year-old employee who works in the plant’s paint reprocessing department.

“A large portion of the staff is already moving on, so we’re numb to having to do it again,” he said. “It’s very sad, but then again, this is the norm most of us are used to.”

Heading into contract negotiations with Stellantis next year, the UAW will push the company to keep the Belvidere open and assign new models to the factory.

“The plant cannot be permanently closed without a purchase from the UAW,” Dziczek said. “So this is an important round of talks coming up.”

Detroit automakers idle prior to previous contract negotiations, only to reopen after negotiating with the union. In 2019, GM was wrapping up production at its Hamtramck plant in Detroit as contract talks began, and it ended up agreeing to produce the first of a new generation of electric vehicles there.

However, in those same talks, General Motors closed its Lordstown, Ohio plant, and resisted union efforts to reopen it. During the sale of the Lordstown plant, General Motors built a new battery plant a mile away. This month, workers at the battery plant voted overwhelmingly in favor of UAW representation.

UAW President Ray Curry said in an interview that he’s been in discussions since August with Stellantis CEO Carlos Tavares, as well as officials from the Biden administration and the Illinois governor’s office in an effort to keep the Belvidere plant alive.

He said, “The company is looking at scenarios to put the product in Belvidere, and I can tell you the governor hasn’t given up, I haven’t given up, and we’re all praying for this plant to survive.”

The plant is sure to become a major topic next year when the UAW membership selects a president. Curry finished just ahead of reform candidate, Sean Fine, in a field of five presidential candidates in the November election. Curry and Fain will face each other in a run-off early next year.

Fain said he would push Stellantis hard to set new models to be built at Belvidere and to keep jobs. In the past, he said, UAW leaders have been very willing to accept the wage, benefits, and job perks that Ford, GM, and Stellantis are seeking.

“These companies have had near-record profits for 10 years now,” he said in an interview. “You have workers who worked their butts off and did their part.”

Even if the UAW is able to negotiate a future for the Belvidere plant, it will likely remain idle long enough to force some workers to retire, transfer, or move to new jobs.

Matheson, operator of the Union Line in Belvidere, may be one of them. He said he plans to consider going back to school to become a certified nursing assistant because moving to another state would be difficult.

He said, “I have three children.” “My mum and dad are both old. I can’t move. I’m going to start over at 47.”

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