Tom Krisher and Bruce Schreiner, The Associated Press
Posted on Monday, September 27, 2021 at 8:03 p.m. EDT
Last updated Monday, September 27, 2021 at 10:03 p.m. EDT
GLENDALE, Ky. (AP) – Ford and a partner company have announced plans to build three major electric vehicle battery plants and an automotive assembly plant by 2025 – a significant investment in the future of automotive technology. electric vehicles that will create around 10,800 jobs and shift the automaker’s future manufacturing footprint south.
The factories, which will be built at sites in Kentucky and Tennessee, will manufacture batteries for the next generation of Ford and Lincoln electric vehicles to be produced in North America. Together, they represent the largest manufacturing investment ever made by a 118-year-old company and are among the largest factory expenditures in the world.
Notably, the new factories will provide a vast supply of jobs that will likely pay solid wages. Most of the new jobs will be full-time, with a relatively small percentage having a temporary status to fill for vacations and absent workers.
Along with its battery partner, SK Innovation of South Korea, Ford has announced it will spend $ 5.6 billion in rural Stanton, Tennessee, where it will build a factory to produce series electric pickup trucks. F. A joint venture called BlueOvalSK will build a battery plant at the same site near Memphis, as well as twin battery plants in Glendale, Ky., Near Louisville. Ford estimated Kentucky’s investment at $ 5.8 billion and that the company’s share of the total would be $ 7 billion.
With the new spending, Ford is making a big bet on a future that envisions most drivers eventually switching to battery power from internal combustion engines, which have powered vehicles in the United States for more than a year. century. If this transition were to cause interruptions or delays, the bet could affect the company’s bottom line. Ford predicts that 40 to 50% of its sales in the United States will be electric by 2030. At present, only about 1% of vehicles on American roads are powered by electricity.
In an interview on Monday, CEO Jim Farley said it would be up to workers at the new factories to decide whether they should be represented by the United Auto Workers union. This question could spark an epic battle with union leaders, who want the workers of tomorrow to join the union and earn the UAW’s top production wages of around $ 32 an hour. This is a high-stakes test for the UAW, which will need jobs for thousands of members who will lose their jobs in transitioning engines and transmissions to petroleum vehicles.
Ford’s move could also put the company at odds with President Joe Biden’s quest to create “well-paying union jobs” in a new, greener economy.
Farley said it was too early to talk about wages or organizing in the new factories. He stressed that Ford will maintain a geographic manufacturing balance when the company’s investments in Ohio and Michigan are included. Ford and General Motors have factories represented by the UAW in Kentucky and Tennessee, states where it is common for political leaders to actively campaign against unionization.
“We love our UAW partners,” said Farley. “They have been amazing on this electrification journey so far. But it’s up to the employees to decide.
Just four months ago, Ford announced the construction of two new battery factories in North America. But Farley said demand for the Mustang Mach E electric SUV and more than 150,000 orders for the F-150 electric pickup convinced the company to increase battery power.
Farley said Ford intends to become the world leader in electric vehicles, a title now held by Tesla Inc., which is creating jobs at a third plant currently under construction near Austin, Texas.
Ford chose the Kentucky and Tennessee sites in part because of lower electricity costs, Farley said, as well as being less exposed to flooding and hurricanes than other states. Battery factories use five times more electricity than a typical assembly plant to make cells and assemble them into packs, so energy costs were a big factor, Farley said.
The company also needed large tracts of land for factories that were not available in other states, Farley said.
The two southern states also have a skilled workforce and are ready to train workers for the new jobs, he said.
“These jobs are very different from the ones we’ve had in the past,” Farley said. “We want to work with states that are really enthusiastic about taking this training and giving you access to this low energy cost. “
The Tennessee Valley Authority, which serves the Memphis area site, sells industrial electricity for less than 93% of competitors nationwide, said CEO Jeff Lyash. Rates have remained stable over the past decade and are expected to remain so for the next 10 years, he said.
Together, the three new battery factories will be able to supply enough batteries to power 1 million vehicles per year, or about 129 gigawatts of power, said Lisa Drake, Ford’s chief operating officer.
Shares of Dearborn, Mich.-Based Ford Motor Co. rose more than 4% in extended trading after the news of the new factories was announced on Monday night.
The union’s reaction was tempered on Monday, with officials appearing optimistic about the organization of the factories.
“We look forward to reaching out and helping to develop this new workforce to build these world-class vehicles and battery components,” Union President Ray Curry said in a statement.
Kristin Dziczek, senior vice president of the Center for Automotive Research which tracks labor issues, said the future of the union largely depends on how the new factories are organized.
“It is imperative that the UAW organize these if they are to have an interest in the electrification of this industry,” she said.
Union representation of factories could become a contentious issue in the next round of national contract negotiations with the union in two years.
When General Motors first announced joint venture battery factories in recent years, its executives said workers would decide to unionize. UAW officials screamed in protest. In May, GM said it would support unionization in factories.
The Kentucky site is only about 80 kilometers south of Louisville, where Ford has factories that make SUVs and trucks now powered by internal combustion engines. Ford didn’t want to say whether those factories would end up making electric vehicles, but Dziczek said converting at least one would make sense. A factory makes the small Ford Escape SUV, in the most popular segment of the US market, she said.
Kentucky Gov. Andy Beshear said in an interview that Ford’s 5,000 jobs at Glendale’s battery factories is the largest job advertisement in state history. And he said it would also create jobs with suppliers who make components for factories. Earlier this month, state lawmakers approved economic development incentives worth $ 410 million.
Beshear said Ford will get a loan of up to $ 250 million to build on during construction. It is forgivable if the company achieves completion milestones. The package also includes the cost of the Glendale land, plus up to $ 36 million in training incentives, he said.
Ford will officially announce the factories with ceremonies on Tuesday at both sites. As of Monday night, in the downtown area one block from Glendale, there were no signs of dramatic changes in the economy due to the new jobs. Everything was quiet in the city where the main shops are the antique shops and the corn and soybean fields stretching in all directions.
The Tennessee assembly plant is to be built on a site about 50 miles (80 kilometers) east of Memphis, or nearly six square miles (15.5 square kilometers). Together, the assembly plant, which will be managed by Ford, and the battery plant, would employ approximately 5,800 workers.
State officials have been trying to develop the site for years without success. Governor Bill Lee said Tennessee offered Ford $ 500 million in incentives to win a contest with 15 other states. Lee said he was confident lawmakers would approve the spending.
Krisher reported from Detroit. Associated Press writer Kimberlee Kruesi contributed from Nashville, Tennessee.