Automaker Stellantis is shutting down its Illinois factory

Stellantis said the company and the industry have suffered from semiconductor shortages and disruptions related to Covid-19. “But the most impactful challenge is the rising costs associated with electrification of the automotive market“, the company said.

The move to halt operations at the factory, which was built in the 1960s, comes ahead of negotiations next year with the United Auto Workers over a new four-year labor contract.

The UAW on Friday criticized Stellantis’ decision to halt work at the Illinois facility and called on the automaker to move another vehicle program to the plant, including potentially building electric cars there.

“Not distributing new product to plants like Belvidere is unacceptable,” UAW President Ray Curry said in a statement.

Stellantis, created by the merger of France’s PSA Group and Fiat Chrysler Automobiles NV in 2021, has ambitious goals for electric cars, pledging to spend $35 billion in the coming years on new models and production facilities. The company said it aims for electric vehicles to account for half of its North American sales by the end of the decade.

The parent company of the Jeep, Chrysler and Dodge brands, Stellantis said it will continue to build the Cherokee at the plant until work stops in February. He would not comment on the future of the midsize SUV.

The decision to shut down the plant comes as the auto industry faces an uncertain economic outlook while continuing to grapple with supply chain issues that have disrupted production for the past two years. At the same time, automakers are under pressure from investors and regulators to pour more money into electric vehicle development.

Some manufacturers are laying off workers in response to these pressures, even though profits have been steady over the past few years on low inventories and high prices for new cars and trucks.

Ford Motor Co.

this summer laid off about 3,000 employees and contract workers. Stellantis in October offered to buy out wage laborers in USA

Still, plant closings in the U.S. auto industry have been rare since 2008-2009, when

General Motors Co.

Ford and the former Chrysler Corp. closed many plants amid a severe decline in auto sales that helped push GM and Chrysler into bankruptcy.

The last major factory to close was the GM assembly plant in

Lordstown,

Ohio, in 2019. The move angered UAW workers ahead of contract negotiations that year and contributed to a 40-day strike at GM’s U.S. factories in late 2019 that drained about $3.5 billion from the the car manufacturer.