Ford CEO Issues Warning As Company Considers Changing Manufacturers After Major Strike

Source: Flickr/Mike Mozart

The CEO of Ford, Jim Farley, issued a warning on Feb 15, stating that last year’s strike has ushered executives to reconsider where they want to build vehicles in the future. Ford is currently moving towards a focus that is primarily on electric vehicles.

Clear Warning

Per Farley, Ford will “think carefully” about the decision they make about where they will build new cars in the future.

Source: Unsplash/Sebastian Herrmann

Due largely in part because of a historic strike by members of United Auto Workers last fall.

Added Costs

As per Farley, Ford allows for a higher budget on manufacturing than its competitors do, this is partly because of its decision to build the majority of their vehicles in the United States, where much of the people who work for the company are unionized.

Source: Unsplash/Jp Valery

Whereas other companies have outsourced the construction of their vehicles to countries like Mexico, taking thousands of jobs away from the U.S.

Hidden Threat

“We have to think carefully about our [manufacturing] footprint,” Farley said.

Source: UnsplashErnest Ojeh

He further explained that Ford was in the process of looking into a transition from internal combustion vehicles to electric vehicles.

Huge Issue

“Our reliance on UAW,” Farley said, “turned out to be: We were the first truck plant to be shut down. Really, our relationship has changed.

Source: Unsplash/Linh Pham

It’s been a watershed moment for the company. Does this have a business impact? Yes.”

Who’s The Real Winner

In the 10 years preceding the strike, the “Big Three” automakers collectively brought in almost 250 billion dollars in profits in North America alone.

Source Unsplash/Giorgio Trovato

And in the first six months of 2023 the industry brought in a jaw dropping $21 billion.

The Reality

Ford wasn’t the only company target by UAW workers in their September strike;

Source: UAW

They went after Ford, GM, and Stellantis after all three major automakers let the union contracts expire.

Different Outcomes

Executives and shareholders in the company were given Shareholders and executives were given multi-million dollar salaries as a reward.

Source: Shutterstock

In 2022 alone the CEO of GM made $29 million, and the CEO of Stellantis made almost $25 million.

What Is Fair

“You cannot make $21 billion in profits in half a year and expect members to take a mediocre contract,” the new UAW president, Shawn Fain, said at the start of the strike.

Source: Unsplash/Hunters Race

“Our campaign slogan is simple: record profits mean record contracts.”

In The Meantime

While executives sit back and rake in the money, workers that spend their careers building the vehicles had their wages fall by almost a third in the 20 years prior to the strike.

Source: freepik/standret

Reports from These Times cites, past union leaders permitted autoworkers to take concessions that made the positions of workers worse.

Allowing Outsiders In

Farley also mentioned that Ford has brought in new management to lean out the company’s operations.

Source: Unsplash/Sebastian Herrmann

He cited the recent success of Chinese autoworkers, who have made notable headway in the European market.

Securing Concessions

Ford was the first of the “Big Three” to come to an agreement with union workers that were on strike for several weeks at that point. The union obtained multiple notable concessions, including a significant wage increase, retoral of benefits that had been taken away, and more protections for temporary employees, whom of which are often exploited factory workers.

Source: Waka Flocka Net Worth

Regardless of the company’s notable profits over the 10 years, Farley explained that Ford has continued to address the need to cut back billions of dollars from cost. He suggested that the company could retain about $2 billion from what Yahoo Finance described as “cultural and structural changes at the company.” He did not mention whether or not cutting these costs includes executive pay.

Making Headway

Farley reports that Chinese automakers have transitioned from selling zero electric vehicles in the European market two years ago to being in control of 10% of the market today.

Source: Adobe Stock

He used one example, BYD’s Seagull vehicle, which he thought cost the company about $11,000 to produce and was a “pretty d…mn good” vehicle.

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Athena Hallet

Written by Athena Hallet

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