Ford is the last of the Detroit Three automakers to propose a new four-year contract to its United Auto Workers (UAW) members, and the tentative agreement will be voted on by the membership in the coming days.
While the contract details for the employees are similar to the UAW labour contracts at Fiat Chrysler Automobiles (FCA) and General Motors (GM), the Ford UAW workers will receive a larger signing bonus if they approve the deal.
The most significant elements of the contract in terms of Ford's production footprint include a commitment to USD9 billion in investment, affecting eight assembly plants, five engine and forging plants, five transmission and driveline facilities, and four stamping facilities. The agreement also extends a moratorium on outsourcing as well as on plant closures or sales through the length of this contract, which runs to 14 September 2019.
The Chicago Assembly plant will receive USD900 million of investment, and will receive an all-new Explorer and police sport utility vehicle (SUV), plus one additional product. The Taurus continues at that plant only through its current life cycle; the contract does not shed light on its future. Ford will invest USD750 million in the Dearborn Truck plant, home to the F-150 pickup, and will add production of the F-150 Raptor edition. Ford will invest USD400 million in the Flat Rock Assembly Plant. The Mustang will carry on at that facility, and will be joined by the all-new Lincoln Continental. The Fusion will continue through its current life cycle (based on market demand) at the plant. Kansas City Assembly Plant will get a USD200-million investment, carrying on with the F-150 and the Transit van. Kentucky Truck will receive a USD600-million investment, in part covering the all-new SuperDuty due in 2016 and also for a "major investment" in the Expedition and Lincoln Navigator. Some parts will also be in-sourced to that plant, including instrument panels, cooling modules, and rear door subs. The next all-new Escape will be built at Louisville Assembly, where the current model is produced alongside the Lincoln MKC, though the planned USD700-million investment will not include the MKC, which is guaranteed only through its current life cycle, allowing increased capacity for the Escape. Michigan Assembly is slated to receive a new product in 2018 and a second one in 2020 – these have been widely reported, but not confirmed, to be a new Ranger pickup and a Bronco SUV, involving a USD700-million investment. Finally, Ohio Assembly will also receive a new product and a USD250-million investment. Production of medium-duty trucks, E-Series Cutaway, and Stripped Chassis continue at the plant.
At the engine facilities, most products will continue with investments for upgrades, including the Dearborn Engine (2.0-liter 4-cylinder, USD50 million); Cleveland Engine (3.7-liter TiVCT V6, 3.5-liter GTDI V6, 2.0/2.3-liter GTDI 4-cylinder engines, USD150 million); Lima Engine (3.5-liter TiVCT, 2.7-liter, two new V6 displacements, USD250 million), and Romeo Engine (5.2-liter, 6.2-liter continue, new displacement for SuperDuty, USD150million).
Livonia Transmission is receiving one of the largest single investments, USD 1.8 billion, to add three new transmissions and gear machining, as well as continuing production of the 6R80 transmission. Sharonville Transmission will receive a USD900-million investment to continue with the 6R140 transmission, as well as add a new transmission family. Three new transmissions are being added at the Van Dyke plant, involving a USD650-million investment, while the 6F/6FM transmissions will continue at the facility. Rawsonville will receive a USD50-million investment, with FHEV batteries and other components continuing production. Sterling Axle will receive a USD400-million investment to continue production of legacy axles as well as new axles for the Expedition and Navigator, and an all-new Explorer axle. The contract's moratorium on closures particularly benefits the Rawsonville, Sterling Axle, and Woodhaven Stamping facilities, reports the Detroit News.
Several stamping plants will also receive investments, and will continue to supply the same assembly plants they do today. The total stamping-plant investment will be USD610 million, with the largest amounts going to Chicago (USD200 million) and Woodhaven (USD300 million).
Outlook and implications
Achieving a vote of approval on the UAW labour contract was difficult for FCA, and GM's skilled-trades workers have rejected its contract, leaving it in limbo. The Ford agreement is notably richer, but it is not clear how the UAW membership will react. However, among the details of the contract, Ford has announced several production moves for the next four years. The investment announcements largely do not change the US Ford lineup, though new production bases appear to be in the works for some products.
The contract language leaves the production future of several vehicles open, including the Taurus, Focus, C-Max, and Fusion. It was reported earlier that production of the Focus and the C-Max will be moved to Cuautitlán in Mexico. The Fusion is already produced at Ford's Hermosillo plant, along with the Lincoln MKZ. IHS Automotive forecasts production at Hermosillo will remain relatively steady through the forecast period, fluctuating from about 330,000 to 375,000 units per year; the Flat Rock plant has supplemented Mexico's Fusion production by about 40,000 units in 2015. The Flat Rock plant will also add production of the Continental, although we forecast that vehicle at annual volumes well below 30,000 units once production is in full swing. Other outstanding questions include potential new homes for the Lincoln MKC and Ford Taurus. While the Taurus has seen sales struggle and is in a shrinking US-market segment, the MKC is in a buoyant market segment. Both products are expected to receive new generations, although Ford is considering production elsewhere.
