Current:Home > MyPoinbank Exchange|Ford CEO says company will rethink where it builds vehicles after last year’s autoworkers strike -Prime Capital Blueprint
Poinbank Exchange|Ford CEO says company will rethink where it builds vehicles after last year’s autoworkers strike
NovaQuant Quantitative Think Tank Center View
Date:2025-04-10 23:45:08
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,Poinbank Exchange 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! (59)
Related
- South Korean president's party divided over defiant martial law speech
- FEMA devotes more resources to outstanding claims filed by New Mexico wildfire victims
- Gary Graham, star of 'Star Trek' and 'Alien Nation,' dead at 73 due to cardiac arrest: Reports
- Union membership hit a historic low in 2023, here's what the data says.
- From family road trips to travel woes: Americans are navigating skyrocketing holiday costs
- North Carolina technology company Bandwidth leaves incentive agreement with the state
- Argentina’s Milei faces general strike at outset of his presidency, testing his resolve
- Qatar says gas shipments affected by Houthi assaults as US-flagged vessels attacked off Yemen
- Apple iOS 18.2: What to know about top features, including Genmoji, AI updates
- Raped, pregnant and in an abortion ban state? Researchers gauge how often it happens
Ranking
- Federal appeals court upholds $14.25 million fine against Exxon for pollution in Texas
- Here’s what to know about Sweden’s bumpy road toward NATO membership
- California woman who fatally stabbed boyfriend over 100 times avoids prison
- Collision of gas truck and car in Mongolian capital kills at least 6 and injures 11
- Why members of two of EPA's influential science advisory committees were let go
- Heavy snow strands scores of vehicles on a main expressway in central Japan
- Watch the 'Avatar: The Last Airbender' official trailer including Aang in action
- The best spin-off games, books and more to experience before Final Fantasy 7 Rebirth
Recommendation
Google unveils a quantum chip. Could it help unlock the universe's deepest secrets?
Inflation slows in New Zealand to its lowest rate since 2021
Combative billionaire Bill Ackman uses bare-knuckle boardroom tactics in a wider war
New York man convicted of murdering woman after car mistakenly pulled into his driveway
Trump's 'stop
Appeals court declines to reconsider dispute over Trump gag order, teeing up potential Supreme Court fight
Tanzania’s main opposition party holds first major protest in several years, after ban was lifted
Oklahoma superintendent faces blowback for putting Libs of TikTok creator on library panel