Those healthy profit-sharing checks that UAW-represented Stellantis workers received earlier this year loomed large as CEO Carlos Tavares was asked Wednesday about contract talks between the union and automaker.
Tavares, addressing reporters and then analysts in separate calls following the release of the company’s latest earnings report where it notched an impressive $12 billion in net profits for the first six months of the year, said the goal of talks will, in part, be to protect those bonuses for years to come and that will depend on keeping the company competitive, particularly in light of the costly electric vehicle transition.
That profit sharing meant the company’s workers were potentially in line in March for checks totaling $14,670 based on last year’s financial performance in North America. Cindy Estrada, the former director of the United Auto Workers union’s Stellantis Department, previously noted, however, that the union’s bargaining team in 2019 “fought hard for an enhanced profit-sharing formula that more fairly distributed profit earnings based on the company’s unique structure.”
That change and the company performance led to the largest profit-sharing amounts the company or its predecessors had announced in 35 years.
“As a consequence of the 2022 results, we gave our U.S. employees a performance bonus of $14,000. … It was the biggest performance bonus among the Detroit Three. And hopefully that contributed to improve the quality of living of my people,” Tavares said. “My point of focus is to find a deal with my union partner that continues to improve the quality of living of my people through the sharing of the performance that we generate, that leads to value creation that then we can monetize.”
Tavares said it’s not just protecting those profit-sharing checks in the short term but also in the long term that matters.
“For that to happen we need to make sure we address a number of operational issues that we have right now which are very, very concrete, that are very measurable. They are not subjective. It’s things that we measure, things which are not questionable in terms of the magnitude of the opportunities we have,” Tavares said.
He didn’t offer specifics, but it’s possible he was referencing items mentioned in a recent letter from Mark Stewart, chief operating officer for Stellantis North America, to employees. It said, “We must focus on improving efficiency, productivity and unplanned absenteeism in our U.S. operations as well as continue the progress that has been made in producing vehicles with the highest quality possible.”
The union has pushed back on this focus, however, particularly in UAW President Shawn Fain’s remarks as the two sides opened contract talks earlier this month. Fain directly called out Tavares for not attending the start of negotiations and Stewart for being late to the meeting, noting a “pathetic irony” in the talk of worker absenteeism. Fain and other union leaders have been outspoken in their demands that Ford, General Motors and Stellantis share a larger portion of their earnings with workers, and the “record” results Stellantis reported Wednesday as well as the $2.5 billion in net income that GM reported in its quarterly earnings on Tuesday are likely to add emphasis to those points. The contracts with the union expire in September.
Tavares said he understands the “posturing” involved in negotiations, but he said that the local leadership teams are empowered to negotiate and are experienced in doing so. Stewart, for instance, led talks for the company in 2019 before the merger that created Stellantis.
“We have a very powerful leadership team in North America that we trust and has the appropriate mandate to lead those discussions, so I don’t need to be everywhere. I will be where I think I will be the most useful to our organization, to our employees, and with our local management, I think we have everything we need,” Tavares said, noting “it is not my intention to be involved in the negotiation process every day,” in part because of the global nature of Stellantis.
Ultimately, Tavares said, the two sides need to sit down together and try to find a “win-win” for employees. He called for open-minded dialogue and a recognition that the world is changing, but he said there is enough imagination around the table to find solutions.
The topics, he said, would include at least one specific plant discussion.
Tavares tied the fate of the idled Belvidere Assembly Plant in Illinois, which produced the Jeep Cherokee SUV, to the outcome of negotiations. The company pinned the decision announced last year to idle the plant to the cost of the electric vehicle transition, and the union has highlighted the negative consequences of that move for the employees and the community.
Tavares said the two sides will need to work on the “concrete stuff. It’s not about, ‘do we bring another product,’ … it’s about ‘do we create the conditions for it to be competitive,’ ” he said of the plant.
On the topic of a potential strike, which some experts have said is likely this year for at least one of the Detroit Three automakers, Tavares said the company does not plan for strikes, although “of course strikes may happen.”
He noted that strikes are a part of the tools a union has to makes its point, but he painted them as destructive.
“Destroying value is not going to make the lives of our people better, and we want to protect the lives of our employees,” Tavares said.
Contact Eric D. Lawrence: elawrence@freepress.com. Become a subscriber.