These factories will produce batteries for the next generation Ford and Lincoln electric cars that will be made in North America. They will be located in Kentucky and Tennessee. They represent the largest single manufacturing investment that the 118-year old company has ever made, and the largest factory outlays worldwide.
The new factories will create a huge new supply of jobs, which will likely lead to solid wages. The majority of these jobs will be full-time, with a small number having temporary status to replace absent or vacation workers.
Ford and SK Innovation, South Korea’s battery partner, have announced that they will spend $5.6B in rural Stanton to build a factory that will produce electric F-Series pickups. BlueOvalSK, a joint venture, will build a battery factory near Memphis and twin batteries plants in Glendale, Kentucky near Louisville. Ford estimated that Kentucky would cost $5.8 billion, and that $7 billion would be Ford’s share.
Ford is betting big on a future where most drivers will switch to battery power from their internal combustion engines. This has been the case in America for over a century. The company could lose its bottom line if the transition is delayed or disrupted. Ford expects that 40% to 50% of U.S. sales by 2030 will be electric. Only 1% of American vehicles are currently powered by electricity.
Jim Farley, CEO of United Auto Workers, stated Monday that it was up to workers at new plants to decide whether they want to be represented by the union. This question could spark a fierce battle between union leaders who want the union’s future workers to join and receive the highest UAW production wages at around $32 an hour. This is a major test for the UAW. It will require thousands of workers to replace the engines and transmissions that were used in petroleum-powered vehicles.
Ford’s decision could also put the company in conflict with President Joe Biden’s desire to create “good-paying union job opportunities” in a new, cleaner economy.
Farley stated that it is too early to discuss pay and unionization in the new factories. Ford will continue to maintain a geographical manufacturing balance once its investments in Ohio, Michigan and other states are added. Ford and General Motors both have UAW-represented plants in Kentucky, Tennessee, and other states where it is common to see political leaders actively oppose unionization.
Farley stated, “We love our UAW partner.” “They have been amazing on the journey of electrification thus far. It’s up the employees to decide.
Ford announced that it would build two more battery plants in North America four months ago. Farley stated that Ford was driven by demand for the electric Mustang Mach E SUV, and more than 150,000 orders to the F-150 electric pickup. This convinced them to increase their battery production.
Farley stated that Ford plans to be the leader in electric vehicles around the globe, a title currently held by Tesla Inc., an upstart company. The company is also adding jobs at a new factory near Austin, Texas.
Farley explained that Ford chose Kentucky and Tennessee because they have lower electricity costs and are less vulnerable to flooding and hurricanes than other States. Farley stated that battery factories require five times as much electricity to make cells and put them together into packs than a typical assembly line, so energy costs are a major factor.
Farley stated that the company needed large tracts of land to plant plants in areas not available elsewhere.
He said that both Southern states have skilled labor force and are ready to train people for new jobs.
Farley stated that these jobs are different from the ones he had in the past. We want to partner with states that are excited about providing that training and allowing you to access that low energy cost.
According to CEO Jeff Lyash, the Tennessee Valley Authority sells industrial electricity at a lower price than 93% of its competitors nationwide. He said that rates have been flat over the past decade, and will continue to be flat for at least the next 10 years.
The three new batteries plants can be combined to provide enough power to power approximately 1 million vehicles annually, or 129 gigawatts, Ford Chief Operating Officer Lisa Drake stated.
Ford Motor Co. shares rose by more than 4% after the announcement of new factories late Monday.
Monday’s reaction from the union was temperate, with officials appearing optimistic about organizing factories.
Ray Curry, union president, stated in a statement that “we look forward to reaching out to help develop this new workforce to construct these world-class cars and battery components.”
Kristin Dziczek is a senior vice president of the Center for Automotive Research and follows labor issues. She said that the future of the union depends on the organization for new plants.
She stated that it was crucial that the UAW organize them if they are going to be involved in electrification of the industry.
The union representation of the plants could be a contentious issue at the next round national contract talks with them in two years.
General Motors announced the first joint venture battery factories in the last few years. Its executives stated that workers would choose unionization when they did. UAW officials protested. In May, GM stated that it would support union organizing at the plants.
Kentucky’s Kentucky site is located approximately 50 miles (80 km) south of Louisville. Ford has plants in Kentucky that produce SUVs and trucks powered by internal combustion engines. Ford would not comment on the possibility of those plants making electric vehicles. However, Dziczek stated that converting at most one of them would be a good idea. She said that the Ford Escape small SUV is made by one plant, which is the most popular segment in the U.S. market.
Kentucky Gov. Andy Beshear stated in an interview that Ford’s announcement of 5,000 jobs at Glendale’s battery plants was the biggest single state employment announcement. He also said that it will create jobs for suppliers who make parts for the plants. The $410 million in economic development incentives that state legislators approved earlier this month was worth $410 million.
Beshear stated that Ford would be eligible for a loan up to $250 million to finance construction. If the company reaches completion milestones, it’s forgiveable. He said that the package includes Glendale land costs and up to $36million in training incentives.
Ford will officially announce the new plants at both locations with ceremonies on Tuesday. On Monday evening, Glendale’s downtown was quiet. There were no indications of any pending significant economic changes due to the new jobs. The town’s primary businesses include antique shops, corn and soybean farms that extend in every direction. It was all quiet here.
Tennessee’s assembly plant will be built on a site that is approximately six miles (6 km) east of Memphis. The assembly plant and battery factory would combine to employ approximately 5,800 people.
The site has been under the control of state officials for many years, but they have not succeeded. Governor. Bill Lee stated that Tennessee offered Ford $500 million as incentives to win a contest against 15 other states. Lee stated that he believes the spending will be approved by legislators.
