Stellantis' Italian Labor Strategy: Balancing Flexibility and Cost in the EV Transition

Stellantis’ labor agreements in Italy offer a compelling case study in balancing industrial flexibility with cost management during the automotive sector’s electrification transition. The 2023 Specific Collective Labor Agreement (CCSL) at the Termoli plant—a key production hub for internal combustion engines (ICEs)—includes an 18.66% salary increase over four years, performance-based bonuses, and merit-driven incentives for line workers [1]. These terms aim to stabilize a workforce facing uncertainty as demand for ICEs declines and the company pivots to hybrid and electric vehicle (EV) technologies. However, the agreement also locks in higher labor costs at a time when Stellantis’ European operations are grappling with weak demand, U.S. tariffs, and a paused Termoli Gigafactory project [2].

The company’s recent extension of a furlough scheme at Termoli—reducing working hours by up to 80% for 1,800 employees—illustrates its attempt to align labor capacity with market realities [3]. This move, combined with voluntary redundancies targeting 200 older workers in 2023, reflects a dual strategy: preserving skilled labor for future hybrid projects while trimming costs in the short term [4]. The 2023 CCSL’s performance-based bonuses, which allocate up to 11.55% of annual salaries to high-performing workers, further incentivize adaptability across roles [1]. Such flexibility is critical as Termoli transitions to producing dual-clutch transmissions for hybrids, a shift delayed by supply chain disruptions and weak EV demand [2].

The Italian labor model contrasts sharply with Stellantis’ North American approach, where a 2023 profit-sharing payment of $13,860 per UAW-represented worker was distributed based on regional profitability [5]. This divergence underscores the company’s tailored strategies: in Italy, where energy and labor costs are structurally higher, Stellantis prioritizes workforce retention and flexibility to navigate a slower EV transition. In contrast, North America’s stronger margins allow for direct profit-sharing, rewarding employees during periods of high performance.

Yet challenges persist. Stellantis’ 70% profit decline in 2024—driven by delayed product launches and plunging North American sales—highlights the risks of over-reliance on labor cost management [6]. The paused Termoli Gigafactory, intended to anchor the company’s European EV strategy, remains a wildcard. Without a clear timeline for EV production, the plant’s long-term viability hinges on its ability to pivot between ICE, hybrid, and EV technologies—a flexibility that the 2023 CCSL’s merit-based incentives aim to foster [2].

For investors, Stellantis’ Italian labor strategy exemplifies the delicate balance required in the automotive transition. By embedding performance-linked rewards and furlough flexibility into its labor agreements, the company seeks to mitigate the financial drag of electrification while maintaining workforce stability. However, the success of this model depends on two critical factors: the timely execution of hybrid and EV projects at Termoli and the broader European market’s ability to absorb higher-cost EVs amid U.S. tariff pressures [3].

Source:
[1] Stellantis' Termoli Plant: A Bellwether for European Auto Industry Resilience and Transition Risks [https://www.ainvest.com/news/stellantis-termoli-plant-bellwether-european-auto-industry-resilience-transition-risks-2508/]
[2] Stellantis Extends Furlough Plan at Italian Plant [https://moparinsiders.com/stellantis-extends-furlough-plan-at-italian-plant-as-demand-slumps/]
[3] Stellantis extends furlough scheme at Italian plant on weak demand, tariffs [https://www.reuters.com/business/world-at-work/stellantis-extends-furlough-scheme-italian-plant-weak-demand-tariffs-2025-08-25/]
[4] Over 1500 Employees Take Early Exit From Stellantis In Italy [https://moparinsiders.com/over-1500-employees-take-early-exit-from-stellantis-in-italy/]
[5] Stellantis Announces 2023 Profit Sharing for UAW- [https://media.stellantisnorthamerica.com/newsrelease.do?id=25699∣=1]
[6] Stellantis records 70% fall in profits amid plunging North American sales and CEO search [https://fortune.com/europe/2025/02/26/stellantis-records-70-fall-profits-amid-north-american-sales-ceo-search/]