WASHINGTON/DETROIT, Oct 4 (Reuters) – Chrysler parent Stellantis (STLAM.MI) has initiated a federal lawsuit against the United Auto Workers (UAW), asserting that the union has breached its contract by threatening to strike over the company’s delayed investments. The lawsuit, filed on Thursday, seeks a judicial declaration from the U.S. District Court in the Central District of California, which would affirm that the decision made by UAW Local 230 in Los Angeles to hold a strike authorization vote is a violation of the contract reached last fall.
Stellantis is not just seeking a legal ruling; the company aims to hold the UAW and its local chapter accountable for any potential revenue losses and other damages that may arise from production stoppages associated with a strike. This legal maneuver underscores the escalating tensions between the automaker and the union as both parties grapple with investment commitments and economic pressures.
On the same day as the lawsuit, a significant majority of UAW members at Stellantis’ Los Angeles Parts Distribution Center voted in favor of requesting strike authorization if the company fails to resolve grievances concerning planned investments. This vote signals a growing unrest among union members who feel that their interests may not be adequately protected.
UAW President Shawn Fain has publicly asserted that Stellantis has violated the contract by retracting its investment commitments. However, Stellantis maintains that any investment decisions were always contingent on market conditions, citing a slowdown in demand for electric vehicles since the contract was signed. The company argues that it remains committed to its investment plans but must adapt to the prevailing economic environment.
“The UAW acted in bad faith by disregarding this language, filing sham grievances, and calling a strike authorization vote to pressure Stellantis to proceed with planned investments,” Stellantis stated in the lawsuit. The automaker’s legal action reflects its frustration with what it perceives as the union’s attempts to coerce the company into expediting investments without a thorough assessment of economic realities.
In a pointed response, Fain sent an email to UAW members on Friday, accusing Stellantis management of launching an “all-out misinformation campaign” designed to instill fear and confusion about their right to authorize a strike. He characterized the lawsuit as a “desperate action” on the part of the company and expressed confidence in the union’s legal position.
Fain’s email emphasized that Stellantis CEO Carlos Tavares appears to be intent on implementing significant cuts to the company’s underperforming U.S. operations. “We will not sit back and watch this company violate our agreement and threaten our jobs, our plants, and our communities. We are united and we are defiant. We will do what it takes to enforce our contracts and protect American jobs,” Fain declared.
The backdrop of this legal confrontation includes Stellantis’s previous commitments as part of its contract with the UAW, wherein the company agreed to invest $1.5 billion in its Belvidere, Illinois assembly plant to facilitate the production of new mid-size trucks by 2027. This investment was part of a broader $19 billion investment strategy outlined by the automaker.
In August, Stellantis acknowledged that it was postponing some investments due to challenging economic conditions. Nonetheless, the company insisted that it “firmly stands by its commitment” to the union and the agreed-upon investments.
Adding another layer to the situation, the U.S. Department of Energy indicated in July that it plans to award Stellantis $334.8 million to convert the shuttered Belvidere assembly plant for electric vehicle production, along with an additional $250 million to transform its Indiana Transmission Plant in Kokomo into a facility for producing EV components. However, these financial awards are still pending final approval, leaving uncertainty in the air.
As the dispute unfolds, the outcome of Stellantis’s lawsuit could have significant implications not only for the company and the UAW but also for the broader auto industry as it navigates the transition toward electric vehicles and evolving labor dynamics.