Ford Motor said Thursday that it planned to invest $3.7 billion in facilities across the Midwest, much of it for the production of electric vehicles, which the company said would create more than 6,000 union jobs in the region.
“We are investing in American jobs and our employees to build a new generation of amazing Ford vehicles,” Jim Farley, the company’s president and chief executive officer, said in a statement. “Transforming our company for the next era of American manufacturing requires new ways of working.”
The announcement, made in conjunction with the United Automobile Workers union, detailed investments in three states. Ford said it would invest $2 billion and create about 3,200 union jobs in Michigan, including many tied to the production of the new F-150 Lightning pickup, the company’s biggest and highest-profile bet on electric vehicles.
In Ohio, Ford will spend more than $1.5 billion and create nearly 2,000 union jobs, primarily to build commercial electric vehicles by the middle of this decade. The company also said it would add more than 1,000 union jobs at an assembly plant in Kansas City, Missouri, that will produce commercial trucks, some gas-powered and some electric.
The company had indicated that some of the investments would come, such as expanding F-150 production capacity in Michigan, but had not detailed the magnitude.
The moves follow Ford’s announcement last year that it would build four factories in Kentucky and Tennessee, three electric vehicle battery factories and a truck assembly plant, which angered union officials and elected leaders in the Middle states. West, who fear losing manufacturing jobs in the South.
In addition to the new Midwest jobs, Ford said he would convert nearly 3,000 temporary jobs to full-time permanent positions before the deadline his UAW contract requires, which is after two years of employment.
“We are always advocating to employers and legislators that union jobs are worth investing in,” UAW President Ray Curry said in a statement. “Ford took a step forward by adding these jobs and converting 3,000 UAW members to full-time permanent status with benefits.”
Sam Abuelsamid, an auto industry analyst at Guidehouse Insights, said the changes were important as a way to help Ford attract and retain a workforce in a tight job market, while potentially helping the company avoid unrest. costly labor during negotiations over a contract that expires next year. as it spends billions on the transition to electric vehicles. A six-week strike by General Motors workers in 2019 cost the company billions of dollars.
“I’m sure one thing Ford would love to avoid is the possibility of a strike,” Abuelsamid said. “Maintaining a positive relationship with the UAW is now in your best interest.”
But the investments seem unlikely to substantially lessen the broader threat that the shift to electric vehicles poses to the autoworkers’ union and to employment in the US vehicle manufacturing industry, which amounts to about a million.
“It’s about changing the perception of what’s going on,” Abuelsamid said. “It’s a balancing act between their workforce and their investors,” who would rather see labor costs rise more slowly or decline at unionized automakers like Ford and General Motors.
Because electric vehicles incorporate far fewer moving parts than gasoline vehicles, they require significantly less labor — about 30 percent less, according to figures Ford has generated.
As a result, estimates suggest that the cost of electrification on auto industry jobs could be significant in the absence of large new government subsidies. A report released in September by the liberal Economic Policy Institute, which has ties to organized labor, found the auto industry could lose about 75,000 jobs by 2030 without substantial government investment.
By contrast, the report found that if additional government subsidies encourage domestic component manufacturing and a larger market share for US-assembled vehicles, the industry could add about 150,000 jobs over the same period.
President Biden has backed substantial subsidies for electric vehicles, including vehicles made by unionized employees, but those measures have languished in the Senate and their prospects are uncertain.
Meanwhile, much of the EV-related job growth has been in non-union facilities owned by new automakers like Tesla, Rivian, and Lucid, or U.S.-based battery facilities wholly or partially owned by companies. foreign companies such as South Korean manufacturers SK Innovation. and LG Chem.
In Thursday’s announcement, Ford said its new battery and vehicle production facilities in the South would create about 11,000 jobs. But those employees won’t automatically become union members, and workers in those states tend to face an uphill battle to unionize.
For investors, however, Ford’s additional investments in electric vehicles appear to be welcome news as the company looks to reinvent itself amid competition from Tesla and Rivian. Ford’s share price, which had fallen substantially this year, rose more than 2 percent on Thursday.
Ford also said Thursday that it sold 6,254 electric vehicles in May, an increase of more than 200 percent from a year earlier. That number included 201 F-150 Lightnings, which the company began production in April.
The company has about 200,000 reservations for the Lightning, which is critical in its efforts to catch up with Tesla, and has stopped accepting new ones because production will take months to meet demand.
Ford indicated that sales of the truck would be much higher in the coming months as production increased and trucks in transit reached dealerships. Ford aims to produce 150,000 Lightning trucks a year by the end of 2023.
Sales of electric vehicles and conventional cars have been limited by a shortage of computer chips. Ford’s overall new vehicle sales in May fell 4.5 percent from a year earlier. Auto executives are also increasingly concerned that the supply of lithium, nickel and other raw materials needed to make the batteries that power electric cars will not keep up with the growing demand for those vehicles.
Vikas Bajaj contributed report.