Ford CEO rethinking where to build cars after crippling UAW strike: ‘Watershed moment’

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 exe🧸cutive said Thursday.

CEO Jim Farley told the Wolfe Research Global Auto Conference in New York that the company 🅰always took pride in it♚s relationship with the UAW, having avoided strikes since the 1970s.

But last year, Ford’s highly profitable factory in Louisville, Ky., was the first truck plant that the UAW shut down𓆉 with a strike.

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Farley said as the company looks at the transition from internal combustion to electric veh💎icles, “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 US, and by far has the most union members — 57,000 — o𝄹f any Detroit automaker.

This came at a higher cost than competitors, who went through bankruptcy and built truck plants in Mex♓ico, he said.

But Ford thought it was the “right kind of cost,” Farleyജ 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 relation🍒ship 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 Ap🎀ril of 2028, taking their top wage to around $42 per hour.

A message was left Thursday seeking comment from the u🐽nion.

High manufacturing costs are amoඣng 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 structur🃏al changes at the com𒊎pany.

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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 v💜ans, Farley said.

Any EV larger than a Ford Escape small SUV “better be really functional or a work𝓡 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 US federal tax credits as high as $7🦋,500 per vehicl🌠e.

He gave no time frame for the small EV to come out, but said Ford’s ๊next generation of electric vehicle🧜s would come in the 2025 through 2027 time frame.

His comments about the union raise questions about whether the new small EV woulꦬd be built in Mexico, which has lower labor costs.

Vehicles⛎ built in North America are still eligible for the US tax credit.

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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 eve🌊n, 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 pꦡrofits 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.