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Ford Motor made what it characterized as a major economic announcement Thursday. The company is adding more capital and labor in its efforts to win in electric vehicles.
Ford (ticker: F) plans to hire 6,200 new unionized workers in the Midwest, converting about 3,000 temporary workers to full-time workers in the process.
Ford will also spend $3.7 billion in Michigan, Ohio, and Missouri to support the new jobs and support Ford’s plan to produce two million electric vehicles annually by 2026.
Some of the $3.7 billion, however, will support the traditional business. About $1.4 billion goes to building new Mustangs and Rangers. There is also another, separate, $1 billion to be spent improving the work environment over the coming five years.
For EVs, Ford plans to spend $5 billion in 2022, a twofold increase over 2021 spending. Overall, Ford has committed to $50 billion in EV spending between 2022 and 2026. The spending plans were raised in March. The old Ford plan called for about $30 billion to be spent between 2020 and 2025.
The $2.3 billion in EV spend in Thursday’s announcement is part of the $50 billion plan.
Ford’s total capital spending, for reference, in 2021 amounted to about $6.2 billion. Engineering, research, and development costs totaled about $7.6 billion.
“Ford is America’s Number 1 employer of hourly autoworkers, and this investment only deepens our commitment to building great new vehicles,” said Ford Chairman Bill Ford in the company’s news release. “I am proud that we are investing in the Midwest and taking real action to provide better benefits and working conditions for our workers on the plant floor.”
Ford employs 56,000 hourly employees in the U.S. and about 183,000 employees worldwide. The current contract with the United Auto Workers, the union representing Ford’s hourly workers, expires in 2023.
The announcement comes before any contract expiration because “we have to put shovels in the ground …this year” to meet EV goals, explains Kumar Galhotra, president of Ford’s gasoline-powered automotive business. “It’s all driven by our product plans and our ambition to accelerate electrification.”
Thursday’s announcement comes after plans announced in 2021, by Ford and EV battery partner SK Innovation (0967770.Korea), to create about 11,000 new jobs in Tennessee and Kentucky. Ford plans new assembly and battery making facilities. Those workers won’t initially be represented by the UAW. “It’s the workers’ choice …we have a fantastic relationship with the UAW,” Galhotra added.
Along with the investment plans, for affirmed its commitment to all-new commercial electric vehicles. That arrives on roads in mid-decade. Ford recently reorganized itself into three new business units: One dedicated to traditional vehicles, one making electric vehicles and one serving Ford’s commercial customers. That’s the Ford Pro business that will sell and service the new commercial EV.
Ford is hosting a conference call and media briefing at 10:30 a.m. Eastern time. It’s also available to watch on YouTube.
Ford shares were up 1.3% Thursday, while the S&P 500 and Dow Jones Industrial Average were down 0.4% and 0.3%, respectively.
Coming into Thursday trading, Ford stock has fallen about 35% this year, worse than the 14% comparable drop of the S&P 500. Inflation and rising interest rates have hit automotive stocks hard. Investors are worried high inflation will squeeze profit margins while rising rates will cool demand for new cars.
Write to Al Root at [email protected]
