Unions and politicians diverge on Ford battery plant pause
The UAW is up in arms. Representatives opposed to Chinese influence are jubilant
News that US OEM Ford has paused investment in its Blue Oval Battery Park in Michigan has divided striking unions and a US House committee investigating Chinese influence. For the former, it is bad news, for the latter good.
“This is a shameful, barely veiled threat by Ford to cut jobs. Closing 65 plants over the last 20 years was not enough for the Big Three, now they want to threaten us with closing plants that are not even open yet,” says UAW president Shawn Fain. “We are simply asking for a just transition to electric vehicles and Ford is instead doubling down on its race to the bottom.”
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In contrast, Representative Mike Gallagher, chairman of the House Select Committee on the Chinese Communist Party, who in July wrote to Ford demanding answers on the role China’s Catl will play within the planned Michigan plant, is in a positive mood. “We are encouraged to see Ford take a crucial first step to re-evaluate its deal with Chinese Communist Party-aligned EV battery firm, Catl.
“Catl's deep ties to CCP forced labour have no place in the American market and make the company exceptionally unfit to receive American taxpayer dollars. Now, Ford needs to call off this deal for good," Gallagher demands.
And the House Republican’s fervour may leave Ford in a tricky position, if the OEM’s pause on the Michigan battery plant is trying to fire a warning shot to the UAW over the potential impact on Ford’s EV competitiveness.
It is perhaps relatively surprising that battery plants have not featured highly in the ongoing dispute between the striking UAW and any of Ford or its ‘Detroit Three’ compatriots GM and Stellantis. Mark Fields, who served as Ford CEO from 2014 to 2017, predicted to US broadcaster CNBC ahead of the UAW confirming strike action in mid-September that ability to organise in battery joint ventures (JVs) would be an issue.
That seemed to be in line with, for example, the UAW’s successful efforts first to unionise at the Ultium battery JV between GM and South Korea’s LGES in December last year, followed by an August agreement on pay rises. But the UAW has largely omitted the EV battery supply chain from its laundry list of demands thus far.
Among concessions Ford has offered the currently militant union, going much further than the other two of the Detroit Three, has been right to strike at any plants threatened with closure. That could limit its flexibility in any further ICE-to-EV pivots by making it harder to shutter obsolete legacy facilities.
Ford’s Michigan pause could be an attempt to sharply remind the UAW that the economics of its EV business, which recorded a $1.1bn loss in Q2 alone, are very different to its ICE business and to not push any further there. Fields offered a stark illustration of the challenge Ford faces on personnel costs alone on EVs when he estimated that, even pre-negotiation, an average Ford or other Detroit Three worker makes $65/hour whereas US EV pure play Tesla pays on average $45/hour.
Even Tesla CEO Elon Musk suggested on the X, formerly Twitter, platform that he also owns on Tuesday that the UAW's demands represented a "sure way to drive GM, Ford and Stellantis bankrupt in the fast lane".
But the worry for Ford in trying to use its battery plant as a bargaining chip is if delays allow suspicions over Chinese partnership on the project to amplify. The last thing the Michigan auto heavyweight wants is to seal a UAW deal that protects its future EV competitiveness, only for the political wind around its plans to embed Chinese lithium iron phosphate chemistry in its battery supply chain plans to have chilled sufficiently to require a long and expensive rethink of that plank of its strategy.