Current:Home > StocksFord CEO says company will rethink where it builds vehicles after last year’s autoworkers strike-InfoLens
Ford CEO says company will rethink where it builds vehicles after last year’s autoworkers strike
View Date:2024-12-23 20:34:28
DETROIT (AP) — Last fall’s contentious United Auto Workers’ strike changed Ford’s relationship with the union to the point where it will “think carefully” about where it builds future vehicles, Ford’s top executive said Thursday.
CEO Jim Farley told the Wolfe Research Global Auto Conference in New York that the company always took pride in its relationship with the UAW, having avoided strikes since the 1970s.
But last year, Ford’s highly profitable factory in Louisville, Kentucky, was the first truck plant that the UAW shut down with a strike.
Farley said as the company looks at the transition from internal combustion to electric vehicles, “we have to think carefully about our (manufacturing) footprint.”
Ford, Farley said, decided to build all of its highly profitable big pickup trucks in the U.S., and by far has the most union members — 57,000 — of any Detroit automaker. This came at a higher cost than competitors, who went through bankruptcy and built truck plants in Mexico, he said. But Ford thought it was the “right kind of cost,” Farley said.
“Our reliance on the UAW turned out to be we were the first truck plant to be shut down,” Farley told the conference. “Really our relationship has changed. It’s been a watershed moment for the company. Does this have business impact? Yes.”
The UAW made strong wage gains after a six-week strike at selected plants run by Ford, General Motors and Jeep maker Stellantis. Top-scale factory workers won 33% raises in a contract that runs through April of 2028, taking their top wage to around $42 per hour.
A message was left Thursday seeking comment from the union.
High manufacturing costs are among the reasons why Ford has a $7 billion annual cost disadvantage to competitors, Farley has said. He told the conference that Ford is making progress on cutting those costs with cultural and structural changes at the company.
It expects to take out $2 billion worth of costs this year, and Farley said he thinks cuts in manufacturing costs will “fully offset” the cost of the UAW contract. Ford has said the contract would add $900 to the cost of a vehicle by the time it reaches full effect.
Ford has shifted its electric vehicle strategy so it concentrates on smaller, lower priced EVs and electric work vehicles such as pickup trucks and full-size vans, Farley said. Any EV larger than a Ford Escape small SUV “better be really functional or a work vehicle.”
A small team within the company is developing the underpinnings of a less costly smaller vehicle, which Farley said would be profitable because of U.S. federal tax credits as high as $7,500 per vehicle.
He gave no time frame for the small EV to come out, but said Ford’s next generation of electric vehicles would come in the 2025 through 2027 time frame.
His comments about the union raise questions about whether the new small EV would be built in Mexico, which has lower labor costs. Vehicles built in North America are still eligible for the U.S. tax credit.
Farley also said he sees EV battery prices coming down with more competition. The company, he said, may go with a common cylinder-shaped battery cell to leverage purchasing and get better prices. He also said Ford might do that with another automaker.
Ford’s Model e, the electric vehicle unit, lost nearly $5 billion before taxes last year. Farley wouldn’t give a date for it to break even, but said any new EV built by the company has to make money within 12 months of its release.
The company still posted net income of $4.3 billion due largely to big profits from its Pro commercial vehicle unit and Ford Blue, the internal combustion division.
Farley said Ford and others will have trouble competing on EVs with Chinese automakers, which are likely to sell 10 million of them this year. It’s a big reason why Ford has recruited management talent to focus on lean operations, he said.
Chinese automakers, he said, went from selling no EVs in Europe two years ago to 10% of the market now.
Chinese auto giant BYD ‘s Seagull small electric vehicle, he said, has about $9,000 in material costs, and it will probably cost the company another $2,000 to meet crash test standards, for a total cost of around $11,000. It has a range of about 150 miles in cold weather, “not a fantastic vehicle, but pretty damn good.”
Shares of Ford fell 1.7% to $12.35 in midday trading on Thursday.
veryGood! (593)
Related
- Taylor Swift Politely Corrects Security’s Etiquette at Travis Kelce’s Chiefs Game
- Head of Theodore Roosevelt National Park departs North Dakota job
- ATTN: The Viral UGG Tazz Slippers Are in Stock RN, Get Them Before They Sell out Ahead of Fall
- Housing costs continue to drive inflation even as food price hikes slow
- The Army’s answer to a lack of recruits is a prep course to boost low scores. It’s working
- US unemployment claims fall 7,000 to 227,000 in sign of resiliency in job market
- 'Love Island UK' stars Molly-Mae Hague, Tommy Fury announce split after 5 years
- Rob Schneider seeks forgiveness from daughter Elle King after 'fat camp' claims
- Nicole Kidman Reveals the Surprising Reason for Starring in NSFW Movie Babygirl
- Wisconsin’s Evers urges federal judge not to make changes at youth prison in wake of counselor death
Ranking
- Pitchfork Music Festival to find new home after ending 19-year run in Chicago
- Viral Australian Olympic breakdancer Raygun responds to 'devastating' criticism
- Get Designer Michael Kors Bags on Sale Including a $398 Purse for $59 & More Deals Starting at $49
- A slain teacher loved attending summer camp. His mom is working to give kids the same opportunity
- Stop What You're Doing—Moo Deng Just Dropped Her First Single
- Judge tells Google to brace for shakeup of Android app store as punishment for running a monopoly
- 'Rust' movie director Joel Souza breaks silence on Alec Baldwin shooting: 'It’s bizarre'
- Family of woman killed by falling utility pole to receive $30M settlement
Recommendation
-
'This dude is cool': 'Cross' star Aldis Hodge brings realism to literary detective
-
Wisconsin’s Evers urges federal judge not to make changes at youth prison in wake of counselor death
-
Kansas City Chiefs player offers to cover $1.5M in stolen chicken wings to free woman
-
Off the Grid: Sally breaks down USA TODAY's daily crossword puzzle, Back Channels
-
My Chemical Romance returns with ‘The Black Parade’ tour
-
NASA Shares Update on Astronauts Stuck Indefinitely in Space
-
Violent crime is rapidly declining. See which cities are seeing drops in homicides.
-
'Rust' movie director Joel Souza breaks silence on Alec Baldwin shooting: 'It’s bizarre'