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Jeep factory closure threatens Illinois city and 1,350 workers

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BELVIDERE, Illinois — The Jeep Cherokee was a strong seller just a few short years ago. In 2019, a plant in Belvidere produced around 190,000 SUVs, employing around 5,000 people and operating three shifts a day.

Since then, sales have dropped. The factory fired the third shift and then the second. This year, it’s on track to make fewer than 20,000 vehicles.

Still, it came as a shock when the manufacturer, Stellantis, announced this month that the 57-year-old factory would be closed indefinitely at the end of February, leaving 1,350 people out of work. And there is a fear across the area, an hour’s drive west of Chicago, that “indefinitely” could mean forever.

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Shane Mathison, a line operator who has worked at the Belvidere plant since 2006, said the news was tough at home, especially for his wife. “She’s freaking out,” he said. “She is scared to death. But I told her, we’ll pay the bills. If I have to do the dishes in two different places, I do. I have to do what I have to do for the family.”

The possible shutdown is a new sign of turmoil in the US auto industry. In addition to threatening economic trouble locally, it adds a contentious element to looming labor negotiations with the company and a tough race for leadership in the United Auto Workers union.

Sales of the Jeep Cherokee, a midsize sport-utility vehicle, have been weighed down by computer chip shortages that have crippled car production around the world for the past two years. Several times Stellantis stopped production of the Cherokee to divert the chips it had into bigger, more profitable vehicles like the Grand Cherokee and trucks like the Ram pickup.

The Cherokee is also in a crowded and highly competitive segment and is an old model. It had its last major makeover in 2014. In contrast, new versions of the Chevrolet Equinox, Ford Escape and Toyota RAV4 have all been introduced within the last four years. An updated Honda CR-V arrived this summer.

At the same time, the auto industry is investing billions of dollars in the transition to electric vehicles, one of the most fundamental shifts in the industry in over 100 years. Half a dozen automakers are building battery plants in Georgia, North Carolina, Michigan, Tennessee and Kentucky. Computer chip makers, moving in part to meet automotive demand, are planning new factories in Ohio, Michigan, New York and Arizona, with the help of grants from the CHIPS and Science Act, passed by Congress in July.

For now, the northwest corner of Illinois is bracing for the effects of the shutdown of the plant, the largest employer in Belvidere, which has a population of 25,000. At the Buchanan Street Pub, Jim Edwards, the bar manager, warmed to the idea.

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

The factory is also an important economic engine for a wider area. “There’s always a big hole left when a factory closes,” said Tom McNamara, mayor of Rockford, a town of 147,000 west of Belvidere. “Assembling cars is a great multiplier of jobs. When the factory closes, many suppliers and other businesses will be affected.”

Stellantis, formed two years ago through the merger of Fiat Chrysler and France’s Peugeot, is solidly profitable, having reported 8 billion euros ($8.5 billion) in net profit in the first half of the year. But it’s also spending big to catch up with Tesla, General Motors and Ford Motor in EVs. The company said this year it would invest $2.5 billion to build its own battery plant in Indiana.

“Our industry has been adversely affected by a myriad of factors, such as the current COVID-19 pandemic and global microchip shortages, but the most impactful challenge is the rising cost related to electrifying the automotive market,” Stellantis said in a statement.

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

“It’s hard,” she said. Keeping factories operating at full capacity “has been difficult as companies need to invest a lot of money in switching to electric vehicles”.

Earlier this year, it looked like the Belvidere plant could become a key part of the company’s strategy. It was in the running to produce battery-powered cars, but Stellantis opted to retool a factory in Brampton, Ontario instead.

Stellantis said it planned to try to transfer workers from Belvidere to jobs at other factories that had openings.

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

“Could be Ohio,” he said. “Could be Michigan. But wherever it is, I’m so invested that I have to go. I’m going to leave my family in Belvidere, and I’m going to do my job until I retire. Then I come home and look for a new job.”

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

“A large portion of the staff has already been transferred, so we are 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.”

The UAW, which is entering contract talks with Stellantis next year, will press the company to keep Belvidere open and assign new models to the factory.

“A factory cannot be permanently closed without UAW buy-in,” Dziczek said. “So this is a really significant round of negotiations to come.”

Detroit automakers shut down plants ahead of previous contract talks, only to reopen them after union negotiations. In 2019, GM was winding down production at its Detroit Hamtramck plant when contract negotiations began, and it ended up agreeing to produce the first of its new generation of electric vehicles there.

In those same negotiations, however, GM closed its Lordstown, Ohio, plant and resisted union efforts to reopen it. While the Lordstown plant was being sold, GM built a new battery plant a mile away. Battery factory workers this month voted overwhelmingly in favor of UAW representation.

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

“The corporation is analyzing scenarios to place product in Belvidere”, he said, “and I can say that the governor has not given up, I have not given up, and we are all defending the survival of that factory”.

The factory will certainly become a hot topic next year when UAW members choose a president. Curry finished slightly ahead of a reformist candidate, Shawn Fain, in a field of five presidential candidates in the November election. Curry and Fain will face each other in a runoff early next year.

Fain said he would put a lot of pressure on Stellantis to designate new models to be built in Belvidere and preserve jobs. In the past, he said, UAW leaders have been all too willing to accept wages, benefits and job concessions sought by Ford, GM and Stellantis.

“These companies had almost record profits for 10 years,” he said in an interview. “You have workers who worked hard and did their part.”

Even if the UAW manages 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.

Mathison, the trade union line operator in Belvidere, could be one of them. He said he planned to go back to school to become a certified nursing assistant because transferring to another state would be difficult.

“I have three children,” he said. “Both my mom and dad are up there in age. I can not move. Basically, I’m going to have to start over at 47”.

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