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Ram’s parent company is taking steps to build its bestselling truck in Mexico, a move that threatens to inflame the automaker’s frayed relationship with its workers’ union.
Stellantis STLA -2.49%decrease; red down pointing triangle, which also houses Jeep, Dodge and Chrysler brands, is expanding its factory complex in northern Mexico to build Ram 1500 pickup trucks, according to people familiar with the matter. The company in recent years has made nearly all of its light-duty Ram pickups at a factory near Detroit.
The company said Tuesday that the Ram trucks would continue to be made at its Sterling Heights assembly plant north of Detroit, and that “no other announcements have been made about production of the Ram 1500.”
The automaker added that it recently disclosed plans to invest $235 million at the Michigan factory to build future electric versions of the pickup. “The investment will bring innovations to the plant to support a multi-energy approach that is laser-focused on meeting customer demand,” it said.
The Mexico plans come about a year after Stellantis signed a landmark labor agreement with the United Auto Workers, granting union members a substantial pay hike and promising billions in U.S.-based investment. Analysts have said the contract, which the union called the richest in its history, would increase labor costs for Stellantis and its rivals, and could compel the companies to shift some factory work outside the country.
A UAW spokeswoman didn’t immediately reply to a request for comment on the company’s Mexico plans.
Stellantis has been building additional factory space next to its existing plant in Saltillo, Mexico, the people said. Satellite images viewed by The Wall Street Journal show that two roughly half-kilometer-long buildings have been constructed in the past several months.
The plans to produce Ram pickups in the space could still change, the people said.
It couldn’t be learned whether the planned factory space in Saltillo would be used to make battery- or gas-powered versions of Ram trucks. Electric Ram trucks are set to hit dealer lots before the end of the year, among other new battery-powered offerings.
Former President Donald Trump has criticized U.S.-based automakers for producing vehicles in Mexico. Locked in a tight race with Vice President Kamala Harris in the swing state of Michigan, Trump has promised to save American auto manufacturing jobs with harsh penalties on companies making cars south of the border.
Trump, in a recent visit to Detroit, the historic center of the American auto industry, threatened tariffs of 100% or more on all vehicles made in Mexico.
The expansion around the northern Mexico city of Saltillo risks ratcheting up tensions with the UAW and its president, Shawn Fain. The union in recent weeks threatened to strike at Stellantis’s U.S. plants over planned factory investments that Fain claims the company is slow-walking. The automaker has denied this characterization, arguing it has flexibility in the timing of its plans.
Stellantis Chief Executive Carlos Tavares has been under pressure to reverse a steep slide in U.S. market share this year, which in part triggered a recent profit warning. Shares have fallen 45% this year, among the worst performances for automotive stocks.
Stellantis has been making vehicles in Saltillo since the mid-1990s, including a heavy-duty version of the Ram pickup. At a separate plant in the area, the company makes Ram ProMaster vans. Ram trucks are Stellantis’s bestselling vehicles in the U.S. and have been a major contributor to the trans-Atlantic carmaker’s surging profits in years past.
The UAW has pushed Stellantis and other carmakers to safeguard manufacturing jobs in the U.S. As part of a historic contract with the UAW, Stellantis agreed to max out its truck-building capacity in Sterling Heights before making Ram pickups in Mexico—meaning the additions in Mexico aren’t meant to result in a decline at the U.S. factory.
The UAW has raised concerns that the company would move Ram pickup-truck production out of the U.S. at the expense of union workers.
“There’s fear across the board,” said Kevin Gotinsky, UAW’s lead bargainer for Stellantis, at a recent union rally in suburban Detroit. “The shift is everything out of this country.”
Stellantis said in a statement that it would continue to abide by last year’s union contract as it manages the transition to electric vehicles.
Automakers have shifted manufacturing to Mexico for decades in a push to lower costs, helped by free-trade agreements established between Mexico and the U.S. More recently Tesla has said it would invest in a new facility in Mexico, though some manufacturers’ plans have been put on pause until after the U.S. election.
Some Chinese car manufacturers have set their sights on production in Mexico, which could allow them to circumvent tariffs on future shipments to the U.S.
Stellantis in recent years has grown increasingly reliant on Mexican facilities to make vehicles sold in North America.
About 27% of Stellantis vehicles made in the region this year were built in Mexico, according to Wards Intelligence data through August. In the same period last year, 23.8% of vehicles made in the region were produced in Mexican plants.
Write to Ben Glickman at ben.glickman@wsj.com
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Appeared in the October 16, 2024, print edition as 'Stellantis to Add Mexican Output'.
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