OTTAWA--Stellantis is in talks to sell its idled Toronto-area factory to a local defense firm, prompting the union representing over 9,000 of the automaker's Canadian employees to declare an impasse on talks toward a new labor deal.

The potential sale is the latest development involving the Stellantis factory in Brampton, Ontario, which hasn't operated since 2024 to undergo retooling.

Stellantis last year unveiled plans to shift the production of its next-generation Jeep Compass to Illinois from Brampton amid hefty Trump administration tariffs on foreign-made cars. The decision sparked the threat of a lawsuit from the Canadian government, which had provided Stellantis with hundreds of millions for work at the plants in Brampton and Windsor, Ontario.

Unifor, which represents auto-assembly workers, said Stellantis disclosed during talks on a new collective-bargaining agreement that the company had an interested buyer of the Brampton plant in a Canadian producer of smart-armored vehicles.

A Stellantis spokeswoman confirmed the interest from Canadian defense manufacturer Roshel, a maker of armored vehicles. Stellantis added that the two sides have signed a memorandum of understanding, which signals both companies' interest in pursuing a transaction.

"The persistence of the company's proposal to close and sell the Brampton plant has hindered the bargaining process," Unifor said, adding that talks have reached an impasse and are now paused. Unifor said the current labor deal expires on Aug. 20.

The Stellantis spokeswoman said Roshel represents the best option to restoring operations at its Brampton assembly plant, "preserving the site's strategic role in Canada's advanced manufacturing sector and helping to avoid a prolonged period of inactivity." She had no further comment, citing collective-bargaining talks with Unifor.

Representatives for Roshel didn't immediately respond to a request for comment. In interviews with Canadian media this summer, the company's chief executive, Roman Shimonov, said he was interested in the idle Brampton plant as the company required more factory space to meet demand.

"We know that many automotive companies pulled out from Canada, and that's exactly where defence can substitute and bring thousands of employees back, including in Brampton," Shimonov said at the time.

A spokeswoman for Canadian Industry Minister Melanie Joly didn't immediately respond to a request for comment.

Government officials have been in talks about the future of the Brampton plant. Joly has threatened to launch a lawsuit against Stellantis, for failing to follow through with the Jeep Compass production, and vowed to recover the millions of dollars that governments provided to the car maker.

Trade relations between the U.S. and Canada have deteriorated in the past three weeks after talks unexpectedly collapsed toward a new trade pact, with both sides blaming the other for raising last-minute demands. Prime Minister Mark Carney has said the negotiations with the U.S. revealed that the Trump administration wanted "to destroy our major industries, including our auto industry."