The Ford Motor Company, the first of the Detroit Three automakers to offer the UAW a contract, has been “stretched” to its “limit” regarding what they can offer.
Their frustration is palpable – their most recent contract boasts “unprecedented improvements in wages,” as Ford Blue President Kumar Galhotra cited in a recent press conference.
What Did Ford Bring to The Table?
Quite a bit, actually.
Under Ford’s contract proposal, UAW workers, hourly or salaried, would be earning more than 75 percent of American workers. Galhotra also emphasized that this proposal included “great benefits” while providing “job security” that would “change the lives” of their employees.
Apparently, UWA President Shawn Fain didn’t think it would change his members’ lives enough. He thumbed his nose at Ford’s “unprecedented” proposal by allegedly remarking that his “handshake” was worth more than what was being offered and calling a strike on Ford’s biggest money maker, their Kentucky plant, on the spot. It’s a surprise move that saw nearly 9,000 UAW workers join the picket line.
It’s a move that the UAW has never used in contract negotiations before and, thus, a strategy that Ford has never used against them.
Both parties are treading water in uncharted territory.
Is Ford’s Future at Risk?
During a recent press conference, Galhotra lamented that Ford was not in a position to offer more, that doing so would essentially put their future as a profitable business at “risk.” He cited that “profitable growth is in the best interest of everyone associated with Ford.”
Ford’s profits are certainly at risk now – their Kentucky plant, based just outside of Louisville, reportedly generates $25 billion for the Blue Oval annually from producing some of their most popular trucks, SUVs, and the prestigious Lincoln Navigator.
For added context, consider that $25 billion annually is more revenue than companies like Marriott International, Southwest Airlines, and Nordstrom generate combined.
It’s not surprising that Kentucky Truck generates that type of revenue for Ford when you consider a new truck is produced there every minute. That revenue is being used to foot the bill for Ford’s massive investment in building new EV battery plants.
Depending on how long the UAW strikes Kentucky Truck for – it might hamper those plans. Anyone who can’t firmly invest in the future of EV production doesn’t have a future in the automotive industry.
Galhotra has stated that Ford is “open to moving some money around within the deal that might fit the union’s needs better.” Still, the company is otherwise “tapped out” on what it can offer the UAW without harming its “future” as a business.
After nearly a month of the strike, neither side is happy with where things stand, but negotiations will continue. However, given his most recent move, it seems unlikely that Shawn Fain will be satisfied with a deal that merely proposes “moving money around.” Even if that’s all Ford claims it can afford.