Stellantis to build Ram 1500 pickup in Mexico despite outcry

Stellantis plans to build some Ram 1500 pickups in Mexico starting in 2025, despite pushback from both the White House and United Auto Workers (UAW) union to keep manufacturing housed in the U.S.

Driving the news: After months of rumors, Ram CEO Christine Feuell confirmed that the company would be boosting production at its Saltillo factory in Mexico during a Reuters-hosted automotive conference this week. The Wall Street Journal reported on the move earlier in October, citing anonymous sources and satellite imagery showing construction at the facility.

• Feuell said the new expansions would allow the Saltillo site to serve as a “relief valve” for the Sterling Heights assembly plant in Michigan, the current home of Ram 1500 production. She added that the U.S. factory (also set to make the REV and Ramcharger) would “be tapped out on capacity with the growth we're projecting in the 1500.”

• Although the Ram CEO denied that the move was implemented to cut labor expenses, Stellantis chief Carlos Tavares previously told investors back in May that sourcing “will move from the Western world to the best-cost countries” as the company looks to save money amidst electrification. The automaker conglomerate saw profits slide 48% in the first half of 2024, despite setting a new earnings record last year.

Zooming in: The move comes despite outcry from workers and government officials to keep jobs in the U.S.

• The UAW had hoped Stellantis would leverage the Warren Truck facility to increase Ram 1500 capacity, rather than turning to Mexico. The plant is close to the Sterling Heights factory and has manufactured earlier versions of the pickup. Instead, the automaker has laid off roughly 1,100 employees at the site.

• Speaking last week, White House Press Secretary Karine Jean-Pierre, noting the company’s agreement to keep manufacturing in the U.S. following the 2023 UAW strikes, also urged Stellantis to honor its commitments to American workers.

• However, the automaker’s contract with the union does allow for Ram 1500 production to expand outside the U.S. as long as the Sterling Heights facility is at maximum capacity.

Bottom line: Stellantis is looking to rectify sales and profitability declines following its poor performance in Q1 and Q2. While its focus on cost-cutting is likely to win it favorability with frustrated investors, it also threatens to worsen the company’s increasingly fraught relationship with the UAW, which has already threatened to go another strike over concerns of plant shutdowns. As time goes on, tensions between the two are only likely to escalate.

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