- Stellantis’ CEO is singling out plants whose output needs repair before even leaving the factory
- The chief exec also noted several cost-cutting ideas are on the table for the automaker
- From reports Stateside, those measures include a voluntary buyout program, and perhaps layoffs
The recent change of tune in the words of Stellantis CEO Carlos Tavares continues apace, with the exec’s latest missives complaining about costs associated with the need to fix U.S.-built vehicles even before they reach showrooms. Speaking to reporters in a scrum on July 25, Tavares is quoted by Automotive News as saying “The direct run rate of some of our plants, starting with SHAP [Sterling Heights Assembly] is not good. And that is something that we need to fix with our plant management team.”
For those not in the know, a “direct run” rate is the proportion of vehicles that get built in a factory and then make it to the end of the assembly line without needing any quality-control rework, fixes, or touch-ups.
Yes, you’re reading that correctly. It seems a sufficient number of Stellantis products – particularly the Ram trucks that Sterling Heights churns out – are being hammered together with such a blasé eye on quality to the point many require fixes before even leaving the factory — or if not “many,” at least enough to catch the eye of engineer-turned-executive Tavares, who runs the place.
The impact of these quality gremlins on the production line cost money in numerous ways. Extra costs associated with paying people to fix cars which should have been built right in the first place are a concern, as are the potential creation of other quality issues brought on by these repairs. “When you are making a repair outside of the main line,” Tavares said, “you can always fix what you have to fix, but create another problem.”
These realizations come at an uncomfortable time, since Tavares – who once said he was giving each of the 14 house brands a decade to prove themselves – has started being bullish on culling brands which aren’t making money. In a fit of bad news for this side of the pond, Stellantis is pointing a finger squarely at the 16% drop in North American sales as a major contributor to its financial woes.
Elsewhere, the company is now planning to reduce salaried headcount through a broad voluntary buyout, described as a “separation program.” It’s not all voluntary, though; according to reports, if not enough employees participate in the buyout, involuntary terminations could follow. Eligible employees will apparently be sent an email in mid-August.
It is worth noting the first part of this story (quality problems) can be at least partially fixed with more people working collaboratively with all hands at the factory level to address these issues. Chopping jobs will not provide that opportunity — it’s tough to cut one’s way to prosperity.
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