Just 8 months after its buyout offers in November 2023, Stellantis has once again proposed a buyout program for its employees. This buyout program is reported to be quite broad, and thousands of its U.S. employees could leave their jobs.
However, if this voluntary buyout does reach the automaker’s target, potential involuntary layoffs may follow.
Did Stellantis Offer Buyouts To Roughly Half of U.S. Salaried Employees?
Automaker company Stellantis has once again revealed its plan to reduce its U.S. employees by offering a voluntary buyout. This has happened before and is happening again for several reasons. Towards the end of July, the company sent an email to its employees, saying that it wanted to offer buyouts to some of its willing employees.
The email also stated that the voluntary separation program was open to nonunion U.S. employees, beginning at the vice president level and proceeding to several lower levels.
Why Does Stellantis Want To Layoff Employees?
The reason for the possible layoff of its U.S. employees is not far-fetched. For several months, the automaker has been having a rough time financially. Therefore, it hopes to lay off these employees, reduce costs, and boost profit significantly.
The email noted that those who are eligible for the buyouts will receive an email in the middle of August with detailed information and instructions on their individualized offers.
What Does a Company Buyout Mean for Employees?
A company buyout is a voluntary system for laying off employees. It is offered to employees by their employers and is an agreement to end the contract between them for a payment or buyout. These buyouts encourage employees to quit voluntarily and accept some high-value incentive or payment for it.
Depending on the company involved, these incentives can include severance pay, stock options, retirement benefits, and many more.
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Company Statement
When news of the company’s buyout plan broke, Stellantis commented by sending an emailed statement. “As Stellantis continues to address inflationary pressures and, importantly, provide consumers with affordable vehicles at the highest quality, we remain focused on taking the necessary actions to reduce our costs to protect the long term sustainability of the company,” the statement read.
After a disappointing first half of 2024, the company had no other choice but to make these decisions sooner rather than later.
Stellantis Disappointing First Half in North America
According to the company’s CEO Carlos Tavares, Stellantis had a “disappointing and humbling” first-half performance. According to its earnings report, the automaking giant’s net profit from January to June was about $6.1 billion (about 5.6 billion euros), a 48% decline from its year-over-year report.
In addition, its adjusted operating income margin fell to 11.4%, while its market share also decreased to 8.2% in North America in the first half of 2024.
Who Is Stellantis Owned By?
Stellantis is a multinational automaker that was formed in 2021 from preexisting automakers. The PSA Group (legally known as Peugeot S.A.) and Fiat Chrysler merged together in 2021 and formed what we now know as Stellantis. The merger made Stellantis the head company of 14 well-known automobile brands, including Jeep, Maserati, and many more.
Public companies and individual investors own the majority of a company’s stock, while insiders and institutional investors own the rest.
Involuntary Option May Be Required if Target Is Not Met Voluntarily
Stellantis’ executives also noted that the company might have no other choice but to take an involuntary layoff option if it doesn’t reach its target through voluntary means.
However, the company is hopeful that even though the buyouts may be challenging to achieve, it is still quite effective in helping them reach their goal. The number of employees the company wishes to buyout and those who will take up the offer is unknown.
Stellantis’ Cost-Cutting Mission
Tavares also explained in the earnings call that the company has been on a severe cost-cutting mission ever since the merger in 2021. This is because the company has been experiencing a lot of financial distress that has built up over time.
Therefore, Tavares describes the company’s poor first-half performance as a bump on the road that “ we are now fixing and that we are going to fight against to make sure that we can rebound from here and that we fix the operational issues that we face.”
Dare Forward 2030 Strategy
Since the company has been facing poor results due to high expenses, ineffective marketing tactics, and operational flaws, Tavares has put forward a “Dare Forward 2030” plan to help turn things around. This plan will increase the company’s profits and double its revenue to $325 billion (300 billion euros) by 2030.
Stellantis is committed to executing this strategy and making tough calls that will “enhance our competitiveness to ensure our future sustainability and growth.”
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Did Previous Buyouts Work?
Stellantis is a big company, so this is not the first time buyouts will be offered. Several executives have told CNBC that the buyouts may be difficult, but they are effective.
However, other company employees who spoke anonymously to the news company said that the whole process was quite grueling for them. Tavares responded, saying that all those claims were false.
Stellantis’ Reduced Employee Headcount
According to public filings, Stellantis cut its employee headcount by 15.5% between December 2019 and December 2023, which means cutting off roughly 47,500 employees. Last November, Stellantis offered almost half its U.S. workforce a massive voluntary buyout program.
Therefore, onions in the country and Italy (which has also been highly affected) are not happy with this decision and have spoken up about it.
Stellantis Is Not the Only Automaker Making Cuts
Due to the company’s high inflation rates, Stellantis is not the only automaker looking to cut costs and boost profits. It is also not the only automaker offering voluntary buyouts and involuntary layoffs.
Just last year, GM also offered voluntary boots to most of its white-collar employees in the U.S. Ford Motor, another automaker giant, also carried out involuntary layoffs when many of its engineers in the U.S. and Canada faced termination from their jobs.
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