Stellantis Extends Furlough Plan at Italian Plant as Demand Slumps

Stellantis has reached a deal with Italian unions to extend furloughs at its Termoli Engine Plant, a move that highlights both sluggish demand in Europe and the impact of U.S. trade tariffs. The agreement, reported by Reuters, allows the automaker to put more than 1,800 workers on reduced hours for up to 12 months starting September 1.

The furlough program replaces a smaller scheme that had covered about 900 workers and will let Stellantis scale back hours by as much as 80% of a worker’s contractual time. Termoli, located in Italy’s Molise region, builds gasoline engines that power a wide variety of Stellantis vehicles across Europe and North America.

Union Concerns and Tariffs – 

According to the Italian Union of Metalworkers (UILM), part of the pressure comes from tariffs imposed by President Donald Trump’s administration. One of Termoli’s key engines, built by roughly 500 workers, had been exported to the U.S. for installation in Jeep® products. Now, that supply chain faces a tariff barrier that could reduce volumes shipped across the Atlantic.

Francesco Guida of UILM added that the slowdown in Europe’s car market and delays in new product launches have further clouded the plant’s near-term outlook. “This will definitely have an impact on activity in Termoli,” Guida told reporters.

Transitioning Role of Termoli – 

The Termoli facility has long been one of Stellantis’ cornerstone engine plants. Since the 1970s, it has produced millions of engines, including the famed FIRE (Fully Integrated Robotised Engine), which powered countless Fiat and Lancia models over four decades until production ended in June 2025 after more than 23 million units were built.

Today, Termoli builds the Global Small Engine (GSE, also known as “FireFly”) in 1.0-, 1.3-, and 1.5-liter sizes for hybrid Fiats and other compact models, along with the Global Medium Engine (GME) turbocharged 2.0-liter  four-cylinder used in the Alfa Romeo Giulia, Stelvio, and Tonale, Dodge Hornet, and Maserati Grecale. The plant also produces the high-performance 2.9-liter twin-turbo V6 found in Alfa Romeo’s Quadrifoglio lineup.

Future Assignments and Delays – 

Earlier this year, Stellantis announced that Termoli would build dual-clutch transmissions for future hybrid vehicles, though that work won’t begin until next year. The plant had also been selected by Stellantis’ Automotive Cells Company (ACC) joint venture as a site for one of three European battery factories, but that project was paused in 2024.

For now, the extended furlough highlights the uncertainty facing not just Termoli but Stellantis’ broader European operations. Until new hybrid and EV programs ramp up, the company’s reliance on conventional engine demand—and the added weight of tariffs—will continue to challenge its Italian workforce.

Source: Reuters