Last fall’s controversial United Auto Workers union strike has changed Ford’s relationship with the union to the point where it is “thinking carefully” about where its future cars are built, Ford’s chief executive said Thursday. Ta.
CEO Jim Farley said at the Wolf Research Global Auto Conference in New York that the company has avoided strikes since the 1970s and has always been proud of its relationship with the UAW. .
But last year, Ford’s highly profitable plant in Louisville, Kentucky, became the first truck plant the UAW shut down due to a strike.
“We need to think carefully about our (manufacturing) footprint” as the company considers the transition from internal combustion engines to electric vehicles, Farley said.
Farley said Ford is determined to build all of its profitable heavy-duty pickup trucks in the U.S. and has the most union members (57,000) of any Detroit automaker. That’s what it means.
This came at a higher cost than a competitor that went through bankruptcy and built a truck factory in Mexico, he said.
But Ford thought it was a “reasonable cost,” Farley said.
“Our dependence on the UAW turned out to be the first truck factory to close,” Farley said at the meeting. “It really changed our relationship. It was a turning point for the company. Will this impact the business? Yes.”
The UAW achieved significant wage increases after a six-week strike at some plants operated by Ford, General Motors and Jeep maker Stellantis.
Top factory workers won a 33% raise in their contract through April 2028, bringing their maximum wage to about $42 an hour.
A message seeking comment was left with the union Thursday.
Farley said high manufacturing costs are one reason Ford has a $7 billion annual cost disadvantage over its competitors.
He told a news conference that Ford is making progress toward these cost reductions through cultural and structural changes within the company.
Farley said he believes the cost of the contract with the UAW will be “fully offset” by lower manufacturing costs, which he expects to cost as much as $2 billion this year. Ford said the deal will add $900 to the vehicle price before it fully takes effect.
Farley said Ford is pivoting its electric vehicle strategy to focus on smaller, lower-cost electric vehicles and electric work vehicles such as pickup trucks and full-size vans.
Bigger than the Ford Escape small SUV, EVs “want to be really functional or work vehicles.”
A small team within the company is developing the basis for a cheaper small car, which Farley said would benefit from federal tax credits of as much as $7,500 per car.
He did not say when the small EV would go on sale, but said Ford’s next generation of electric vehicles will be launched between 2025 and 2027.
His comments about labor unions have raised questions about whether new small electric cars will be produced in Mexico, where labor costs are low.
Vehicles manufactured in North America will continue to qualify for U.S. tax credits.
Farley also predicted that EV battery prices will fall due to increased competition. He said the company may adopt common cylindrical battery cells to leverage purchasing and get better prices. He also said Ford could do it with other automakers.
Ford’s Model E electric vehicle unit lost nearly $5 billion before taxes last year. Farley declined to say when the company will reach breakeven, but said the new EVs it makes must be profitable within 12 months of launch.
The company still posted a net profit of $4.3 billion, largely due to strong gains from its Pro commercial vehicle division and its Ford Blue internal combustion engine division.
Farley said it will be difficult for Ford and others to compete in EVs with Chinese automakers, which are likely to sell 10 million EVs this year. That’s a big reason Ford hired executive talent to focus on lean, he said.
