MICHIGAN: Ford Motor Co will ask the United Auto Workers (UAW) union for flexibility to reduce electric-vehicle (EV) production in case the US market for battery-powered cars lags behind expectations.

       Negotiations open today for a new four-year contract for Ford’s more than 57,000 US hourly workers.

       And talks are expected to be contentious as the union seeks pay raises, a restoration of cost-of-living increases and job guarantees while the industry shifts to less labor intensive electric-vehicle production.

       New UAW president Shawn Fain has said he is going to “war” against the Detroit automakers and accused them of engaging in a “race to the bottom” in the EV transition with factories that will employ fewer workers earning lower wages.

       This week, Fain eschewed the ceremonial handshake-across-the-bargaining-table with chief executive officers that has marked the opening of auto contract talks for decades, saying he’ll do so “when they come to the table with a deal.”

       Ford will seek leeway in its US$50bil (RM231bil) plan to boost EV production 15-fold to two million models a year by the end of 2026.

       The company wants the ability to move workers to factories building the most in-demand models, whether they’re powered by electricity or traditional internal combustion, according to Ford sources who requested anonymity discussing internal matters.

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       The current union contract restricts Ford’s ability to flex production, they said.

       Ford has reason for caution. The United States has been the slowest major market to adopt EVs, lagging behind China and Europe.

       EV sales growth in the world’s biggest economy slowed to just under 50% in the first half of the year, down from 71% during the same period in 2022, as inventories of battery-powered models ballooned.

       Ford’s US EV sales fell 2.8% during the second quarter as it overhauled a Mexican factory to boost output of the Mustang Mach-E, while sales of the F-150 Lightning plug-in pick-up grew just 4%.

       Ford is hoping to convince the union to give it more flexibility by noting that it employs as many as 14,000 more US hourly workers than either General Motors Co or Stellantis NV, parent company of Chrysler and Jeep.

       Having the biggest US hourly workforce costs Ford an extra US$1bil (RM4.61bil) a year compared to its domestic competitors, the sources said.

       Ford’s labour costs, including wages and benefits, are US$64 (RM295) an hour, compared to US$55 (RM254) an hour at the non-union assembly plants of international automakers such as Toyota Motor Corp.

       That creates a labour cost gap of US$900mil (RM4.2bil) with the international automakers, the people said. Labour costs at Tesla Inc are even lower at US$45 to US$50 (RM208 to RM231) an hour.

       Ford also plans to pledge to bring more EV manufacturing in-house to help offset the lower labour requirements, the people said.

       Chief executive officer Jim Farley has said controlling more elements of EV and battery production will give Ford a competitive advantage.

       Last month, Farley penned a Detroit Free Press opinion piece defending Ford’s hourly compensation, which he wrote comes to US$112,000 (RM516,712) in annual pay and benefits.

       That elicited a sharp response from UAW vice-president Chuck Browning, who accused Farley of misleading the public and “utilising old, musty and ineffective tactics.”

       Farley is under pressure to reverse US$3bil (RM13.8bil) in projected EV losses this year and achieve an ambitious goal of generating an 8% return, before interest and taxes, on battery-powered models by the end of 2026. — Bloomberg