Sep 29, 2023 - Economy

Ford CEO: UAW "holding the deal hostage" over EV battery plants

The UAW expanded its strike against Ford and General Motors on Friday.

The UAW expanded its strike against General Motors and Ford on Friday. Photo: Bill Pugliano/Getty Images

Ford CEO Jim Farley said Friday the automaker is "very close" to a record labor agreement with the UAW, but he believes the union is delaying the deal over reservations about electric vehicle battery plants.

Why it matters: The shift to electric vehicles, and the impact that could have on unionized auto workers, has long been a simmering issue in labor talks with U.S. automakers.

  • As the two sides move closer to agreement on big wage and benefit hikes, job security in the EV era is now front and center.

Driving the news: In a call with reporters Friday, Farley said Ford's negotiations with the union are at a critical juncture.

  • The UAW had demanded a 40% wage hike over four years; Ford had offered 20%.
  • The two sides are now "really close on the economics," Farley said, adding "we are confident we would be able to make the investments we need to, including $50 billion in EVs."
  • "We believe the UAW is holding the deal hostage over battery plants."

Catch up fast: Ford earlier this week paused construction of a $3.5 billion electric vehicle battery plant in Michigan, citing concerns about its ability to competitively operate the plant.

  • The plant is one of four battery factories that Ford plans to build in the U.S. to supply future EVs.
  • UAW President Shawn Fain slammed the decision earlier this week, saying it was "a shameful, barely-veiled threat by Ford to cut jobs."
  • The UAW wants automakers to pay workers at battery plants the same higher wages as workers that build engines and transmissions.
  • Ford says workers haven't even been hired yet for the battery plants, which are still under construction, so they haven't even decided whether to join the union, much less negotiate a contract.

Between the lines: Three of the battery plants Ford is building in Tennessee and Kentucky are joint ventures with a Korean partner, but the Michigan plant has been the subject of intense scrutiny because of Ford's plan to use technology licensed from a Chinese company.

  • Republicans in Congress are investigating the deal because of worries that it could facilitate the flow of U.S. tax subsidies to China.
  • Farley said the company paused work on the battery plant in order to assess labor costs and how new rules around future EV tax credits will be implemented.
  • Ford also wants to see "whether we can secure a deal that allows us to invest in the products those batteries are going to go into."

What they're saying: "What is at stake here is the future of the domestic auto industry, future of industrial Midwest, and future of good paying manufacturing jobs."

Where it stands: It's been two weeks since the UAW launched its unprecedented strike against GM, Ford and Stellantis.

  • On Friday, the union expanded the strike to include two additional factories: a GM plant in Lansing, Michigan, and a Ford plant in Chicago, affecting 7,000 workers.
  • There are now five assembly plants and 38 parts distribution centers on strike across the country.
  • The additional walkouts Fain announced Friday mean that 25,000 workers, or 17% of UAW members at the Big Three, are currently on strike.
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