Ford’s CEO, Jim Farley, revealed on Thursday that last year’s contentious United Auto Workers’ (UAW) strike has significantly impacted the automaker’s relationship with the union, to the extent that it will prompt Ford to reconsider future manufacturing decisions, including the location of vehicle production.
Speaking at the Wolfe Research Global Auto Conference in New York, Farley acknowledged that Ford historically prided itself on a strong relationship with the UAW, having avoided strikes since the 1970s. However, the strike at Ford’s highly profitable factory in Louisville, Kentucky, during the recent fall changed the dynamic.
Farley emphasized that as Ford transitions from internal combustion to electric vehicles, the company needs to carefully assess its manufacturing footprint. He noted that the decision to build all highly profitable big pickup trucks in the U.S. came with a higher cost compared to competitors who built truck plants in Mexico after going through bankruptcy. Despite the higher cost, Ford considered it the “right kind of cost.”
The strike by the UAW resulted in a significant impact on Ford’s operations and prompted the company to rethink its relationship with the union. Farley stated that the strike was a watershed moment for the company, changing the dynamics of its relationship with the UAW. The shift in the relationship is expected to influence future business decisions, including manufacturing and location strategies.
The UAW, through the strike, secured strong wage gains for its members, with top-scale factory workers receiving a 33% raise through a contract running until April 2028. This wage increase has financial implications for automakers, impacting their cost structures and potentially influencing decisions on manufacturing locations and strategies.
