Glendale, Kentucky, Sep 28 (BUS): Ford and its partner announced that they plan to build three major electric car battery plants and an assembly plant by 2025 — a major investment in the future of electric car technology that will create an estimated 10,800 jobs and transform the footprint of future auto manufacturing toward the South.
The plants, which will be built at locations in Kentucky and Tennessee, will make batteries for the next generation of Ford and Lincoln electric cars to be produced in North America. Taken together, they represent the largest single industrial investment the 118-year-old company has ever made, and are among the largest factory expenses in the world.
Notably, the new factories will provide a massive new supply of jobs that are likely to pay fixed wages. Most of the new jobs will be full-time, with a relatively small percentage having temporary fill status and absent workers, the AP reports.
Together with its battery partner, SK Innovation of South Korea, Ford says it will spend $5.6 billion in rural Stanton, Tennessee, where it will build a plant to produce F-Series electric trucks. A joint venture called BlueOvalSK will build a battery plant on the same site near Memphis, as well as dual battery plants in Glendale, Kentucky, 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 placing a big bet on a future that envisions most drivers eventually switching to battery power from internal combustion engines, which have powered the United States for more than a century. If this transition encounters disruptions or delays, gambling may reach the company’s net profit. Ford expects that 40% to 50% of its sales in the United States will be electric by 2030. Currently, only about 1% of vehicles on America’s roads are powered by electricity.
In an interview on Monday, CEO Jim Farley said it was up to workers at the new plants to decide whether to be represented by the United Auto Workers union. This question could pose an epic battle with union leaders, who want future employees to join the union and earn the highest UAW production wages of about $32 an hour. It represents a high-risk test for the UAW, which will need jobs for the thousands of members who will lose work transitioning away from the engines and transmissions of petroleum-powered vehicles.
Ford’s move could also put the company at odds with President Joe Biden’s drive to create “well-paid union jobs” in a new, greener economy.
Farley said it was too early to talk about salaries or unions in the new factories. He emphasized that Ford will maintain a geographic manufacturing balance when the company’s investments in Ohio and Michigan are included. Ford and General Motors have plants represented in the UAW in Kentucky and Tennessee, where it is common for political leaders to actively campaign against unions.
“We love our partners at UAW,” Farley said. “They have been amazing on this electricity journey so far. But it is up to the staff to decide.”
Just four months ago, Ford said it would build two new battery plants in North America. But Farley said demand for the electric Mustang Mach E SUV and more than 150,000 orders for an electric F-150 pickup truck have convinced the company to ramp up battery production.
Farley said Ford intends to lead the world in electric vehicles, a title now held by Tesla Inc. , which is adding jobs at a third plant now under construction near Austin, Texas.
Ford chose the Kentucky and Tennessee locations in part because of their lower electricity costs, Farley said, as well as being less prone 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, Farley said, so energy costs were a big factor.
Farley said the company also needed large tracts of land for stations that were not available in other states.
He said both southern states also have skilled workforces and are ready to train workers for the new jobs.
“These jobs are very different from the jobs we had in the past,” Farley said. “We want to work with countries that are really excited to do this training and enable you to get to this low energy cost.”
The Tennessee Valley Authority, which serves the Memphis area location, sells industrial electricity for 93% less than competitors nationwide, CEO Jeff Lyach said. He said that prices have remained stable over the past decade and are set to remain stable for the next ten years.
Combined, the three new battery plants will be able to supply enough batteries to power one million cars a year, said Lisa Drake, Ford’s chief operating officer, or about 129 gigawatts of power.
Shares of Ford Motor Co., based in Dearborn, Michigan, rose more than 4% in extended trading after new plants were announced late Monday.
The union’s reaction was muted on Monday, as officials sounded optimistic about factory regulation.
“We look forward to reaching out and helping develop this new workforce to build these world-class vehicles and battery components,” union president Ray Carey said in a statement.
Kristin Dzeczyk, vice president of the Automotive Research Center that tracks labor issues, said the union’s future largely depends on the regulation of new plants.
“It is imperative that the UAW regulate these if they are to take a stake in the electrification of this industry,” she said.
Union representation for factories could become a contentious issue in the next round of national contract talks with the union in two years’ time.
When General Motors first announced a joint venture for battery plants over the past few years, its executives said workers would decide to join the unions. UAW officials howled in protest. In May, GM said it would support union organizing at factories.
The Kentucky site is located about 50 miles (80 kilometers) south of Louisville, where Ford has factories that make SUVs and trucks that are now powered by internal combustion engines. Ford won’t comment on whether these factories will eventually make electric cars, but Dziczek said converting at least one would make sense. She said one factory makes the Ford Escape small SUV, in the most popular segment of the US market.
Kentucky Governor Andy Beecher said in an interview that Ford’s 5,000 jobs at the Glendale battery plants are the largest single job advertisement in the state’s history. He said it would also create jobs with suppliers who make components for factories. Earlier this month, state lawmakers approved $410 million in economic development incentives.
Bashir said Ford would take out a loan of up to $250 million to pull through construction. It is forgiving if the company has reached milestones. The package also includes the cost of Glendale land, as well as up to $36 million in training incentives, he said.
Ford will officially announce the plants with festivities on Tuesday at both locations. In the one-building downtown Glendale Monday night, there were no signs of dramatic changes pending in the economy from new jobs. All was quiet in the city as the main businesses were the antique shops and the fields of corn and soybeans stretching in all directions.
The assembly plant in Tennessee will be built on a site approximately 50 miles (80 kilometers) east of Memphis or approximately six square miles (15.5 square kilometers). The Ford-run assembly plant and battery plant will employ about 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.