Ford Motor has announced the suspension of construction on a battery factory in Michigan due to concerns about its ability to produce products at a competitive price. The decision comes amid tense contract negotiations with the United Automobile Workers (UAW) and criticism from Republican lawmakers over Ford’s partnership with Chinese battery maker CATL.
The halt in construction raises questions about the reasons behind the decision. It remains unclear whether it is directly related to the negotiations with the UAW or if other issues are at play. Ford has warned that increases in pay and benefits sought by the union would undermine its efforts to scale up production of electric vehicles. Ford CEO Jim Farley stated in an interview that granting all of the union’s demands would force the company to cancel its electric vehicle investments.
The suspension of construction on the battery factory comes just one day before President Biden is scheduled to visit Michigan and join picket lines with the UAW. The president of the UAW, Shawn Fain, called the decision “a shameful, barely-veiled threat by Ford to cut jobs.” Fain argues that the union is simply asking for a fair transition to electric vehicles, while Ford is focused on cost-cutting measures.
The strike by workers at a Ford factory in Wayne, Michigan, has been ongoing for over a week. However, the UAW has credited Ford with making more efforts to meet the union’s demands compared to General Motors and Stellantis, which manufactures Jeep and Ram vehicles. The demands include a 40 percent increase in pay, a shorter workweek, protection against inflation, and other benefits. Last week, the UAW expanded its strikes to include parts distribution centers at General Motors and Stellantis, but Ford was spared.
The Marshall factory, where construction has been suspended, was set to produce lithium-iron-phosphate (LFP) batteries, an alternative to batteries made with lithium, nickel, and cobalt. While LFP batteries are heavier, they cost less and do not raise the same environmental and human rights concerns as batteries made with nickel and cobalt. Currently, LFP batteries are not mass-produced in the United States, and automakers like Tesla import them from China. Ford argues that manufacturing the batteries in the United States with Chinese technology is a better option than importing them.
The Biden administration is also formulating rules that could limit U.S. companies from working with certain Chinese firms, adding further uncertainty to the regulatory climate. This could be a contributing factor to Ford’s decision to halt work on the plant. Additionally, the company may be trying to exert pressure on the union through its decision.
Ford initially announced plans to invest $3.5 billion in the battery factory and employ 2,500 people when production begins in 2026. However, the current suspension of construction raises questions about whether these plans will proceed as intended.
In summary, Ford’s decision to suspend construction on its battery factory in Michigan due to concerns about competitiveness raises questions about the impact of ongoing contract negotiations with the UAW and overall manufacturing strategies for electric vehicles. The halt comes at a critical time, with the UAW on strike and Ford being scrutinized for its partnership with a Chinese battery maker. The future of the battery factory remains uncertain as Ford navigates these challenges.