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Ford Reaches Spending Limit for New Contract with Striking Autoworkers

Top exec says the carmaker has reached the limit of how much money it will spend to get a contract agreement.

Region 2B director David Green speaks with United Auto Workers outside a gate at Stellantis Toledo Assembly Complex on Thursday, Oct. 12, 2023 in Toledo, Ohio.
Region 2B director David Green speaks with United Auto Workers outside a gate at Stellantis Toledo Assembly Complex on Thursday, Oct. 12, 2023 in Toledo, Ohio.
Isaac Ritchey/The Blade via AP

DETROIT (AP) — A top Ford executive says the company has reached the limit of how much money it will spend to get a contract agreement with the striking United Auto Workers union.

Kumar Galhotra, president of Ford Blue, the company's internal combustion engine business, told reporters Thursday that Ford stretched to get to the offer it now has on the table.

His comments are starkly different from those made by UAW President Shawn Fain Wednesday when he announced an escalation of the union's strike by walking out at Ford's largest and most profitable factory. The apparently widening labor rift indicates that Ford and the union may be in for a lengthy strike that could cost the company and workers billions of dollars.

Fain said on Wednesday that Ford told UAW bargainers for nearly two weeks that it would make another counteroffer on economic issues. But at a meeting called by the union, the company didn't increase its previous offer, Fain said. "Ford hasn't gotten the message" to bargain for a fair contract, Fain said in announcing the walkout by 8,700 workers at the company's Kentucky Truck Plant in Louisville.

"We've been very patient working with the company on this," he said in a video. "They have not met expectations, they're not even coming to the table on it."

Galhotra called Ford's offer "incredibly positive" and said Ford never indicated to the union that it would be increased.

"We have been very clear we are at the limit," he said on a conference call with reporters. "We risk the ability to invest in the business and profitably grow. And profitable growth is in the best interest of everybody at Ford."

The company has a set amount of money, but is willing to move dollars around in a way that might fit the union's needs, he said, adding that he still thinks it's possible to reach a deal.

The escalation of the strike came nearly four weeks after the union began its walkouts against Ford and Detroit counterparts General Motors and Jeep maker Stellantis on Sept. 15, with one assembly plant from each company. The union later added 38 parts warehouses at GM and Stellantis, and then three Ford and Stellantis assembly plants, involving a total of 33,700 workers.

On Thursday, Fain hinted at further action against Stellantis.

"Here's to hoping talks at Stellantis today are more productive than Ford yesterday," Fain wrote on X, formerly Twitter, without saying what might happen.

A person with direct knowledge of the talks said the union met with Stellantis Thursday morning and was to return for more talks in the afternoon. The person, who didn't want to be identified because he is not authorized to discuss negotiations, said talks were active with GM and Stellantis, but he was not aware of any negotiations with Ford.

So far the union has not announced any further job actions, although Fain is set to brief the membership in a video appearance Friday morning.

Ford's sprawling truck plant in Kentucky makes heavy-duty F-Series pickup trucks and large Ford and Lincoln SUVs, the company's most lucrative products. The vehicles made at the plant generate $25 billion per year in revenue, more than Southwest Airlines and Marriott, the company said.

Ford said the expanded strike puts 13 other Ford plants that supply or receive parts at risk, as well as 600 parts supply companies that would have to lay off workers. In all, the strike at Kentucky Truck affects 100,000 workers, the company said.

The company said many Super Duty truck chassis cabs are used to build emergency vehicles such as ambulances. If those can't be manufactured or parts can't be produced "we're jeopardizing more than just Ford profits," said Ted Cannis, CEO of Ford's commercial vehicles unit.

Last week the union said Ford's general wage offer is up to 23% over four years. GM and Stellantis were at 20%. But Fain said none was high enough.

Anthony Spencer, who has worked at the truck plant for eight years, said the surprise walkout would get Ford's attention.

"We know it's going to hit them. We lose a lot of millions of dollars every day that we don't run," said Spencer, who is the local union's recording secretary and helped organize the walkout.

"This is a historic moment," Spencer said on the picket line Thursday morning, adding that the local hasn't been on strike since 1976. "We've got people that's got 30, 35, 40 years — they've never been on strike. So the morale is good."

He said there were a few sticking points with negotiations that prompted the strike, including the unionization of Ford's electric vehicle workers and employee raises.

"We all know if we ever go EV, we're going to lose a lot of members that build engines, transmissions, and they got to have a place to go," Spencer said.

CFRA analyst Garrett Nelson wrote in a note to investors that the strike escalation at Ford likely means that the walkout will go on for a long time "as the UAW leadership attempts to drive the best possible labor deal."

The move also makes it likely that the union will soon target other key truck and SUV plants from GM and Stellantis, he wrote.

Thus far, the union has decided to target a small number of plants from each company rather than have all 146,000 UAW members at the automakers go on strike at the same time.

Last week, the union reported progress in the talks and decided not to add any more plants. This came after GM agreed to bring joint-venture electric vehicle battery factories into the national master contract, almost assuring that the plants will be unionized.

Battery plants are a major point of contention in the negotiations. The UAW wants those plants to be unionized to assure jobs and top wages for workers who will be displaced by the industry's ongoing transition to electric vehicles.

Since the start of the strike, the three Detroit automakers have laid off roughly 4,800 workers at factories that are not among the plants that have been hit by the UAW strikes.

Separate companies that manufacture parts for the automakers are likely to have laid off workers but might not report them publicly, said Patrick Anderson, CEO of the Anderson Economic Group in Lansing, Michigan.

A survey of parts supply companies by a trade association called MEMA Original Equipment Suppliers found that 30% of members have laid off workers and that more than 60% expect to start layoffs in mid-October.

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