Stellantis Shifts Gears: Morocco's Automotive Boom Raises Questions for European Manufacturing

Saturday 19 October 2024 - 11:40

By: Dakir Madiha

Stellantis Shifts Gears: Morocco's Automotive Boom Raises Questions for European Manufacturing

The automotive industry landscape is undergoing a significant transformation as Stellantis, the multinational automotive manufacturing corporation, ramps up production in Morocco while scaling back operations in Italy. This strategic move has sparked concerns among industry experts and local officials about the future of automotive manufacturing in Europe.

Stellantis has invested approximately €300 million in its Kenitra factory in Morocco, with ambitious plans to double its production capacity from 200,000 to 400,000 vehicles annually. This expansion comes at a time when the company's Melfi plant in Italy has seen a substantial reduction in its workforce. The once-thriving Italian facility, which employed up to 7,800 workers between 2014 and 2016, now operates with a reduced staff of 5,425. The local supplier network has also experienced a similar downturn, with employee numbers dropping from over 5,000 to 3,500.

Francesco Somma, president of Confindustria Basilicata, expressed his apprehension about the situation, stating, "The reorganization of the Stellantis production site in Melfi is progressing, and the supply chain is struggling to keep pace with the client due to low visibility on new orders and future production volumes." Somma emphasized that the coming weeks will be crucial in attempting to reverse this trend and influence an industrial strategy that currently foresees Melfi producing less than half of its maximum production capacity.

These concerns are echoed by trade union representatives and Melfi's Mayor Giuseppe Maglione. They have highlighted the need to re-evaluate choices made regarding electric vehicles and stressed the importance of Stellantis to the region's economy, given its significant contribution to Basilicata's GDP.

Stellantis CEO Carlos Tavares recently praised the performance of the company's Spanish factories while cautioning about the growing competition from Morocco. He pointed out that the real competition for the Iberian Peninsula factories lies to the south, including Morocco, and potentially Algeria, Tunisia, Egypt, and Turkey in the near future.

Morocco has emerged as a leading automotive manufacturing hub, surpassing China to become the European Union's top automotive trading partner in 2023. The country has set ambitious goals to expand its production capacity to one million vehicles annually by 2025, up from its current capacity of 700,000. With its strategic location, cost-effective labor, skilled workforce, and focus on higher-value production, Morocco is positioning itself as a major player in the global automotive industry.

This shift in manufacturing dynamics raises important questions about the future of automotive production in Europe and the economic implications for regions heavily dependent on this industry. As Stellantis and other manufacturers continue to invest in emerging markets like Morocco, European policymakers and industry leaders face the challenge of maintaining competitiveness while addressing the concerns of workers and local communities affected by these changes.

The evolving situation underscores the need for a comprehensive strategy that balances the economic benefits of global manufacturing with the preservation of local industries and employment. As the automotive sector continues to evolve, particularly with the transition to electric vehicles, the industry's landscape is likely to see further transformations, requiring adaptability and innovation from all stakeholders involved.