Ford: Kentucky plant’s shutdown nudges supply chain ‘further toward collapse’
Workers at the Ford Kentucky Truck Plant (KTP) joined the United Auto Workers union strike Wednesday evening, a decision that could have more impacts than just in Ford’s pockets.
Auto workers across the United States have been striking against Ford, General Motors and Stellantis since Sept. 15 over pay and profit-sharing. Nearly 9,000 workers at KTP walked off the job Wednesday before their scheduled shifts at 6 p.m.
KTP is the biggest truck plant in the world. It generates roughly $25 billion in revenue yearly, which is responsible for roughly 16% of Ford’s global revenue, according to Ford Blue President Kumar Galhotra. The facility rolls out a new truck every 37 seconds.
If KTP were a standalone business, it would make more money than Southwest Airlines, Marriott International and Nordstrom, according to Galhotra.
The loss of that production is detrimental to the company, but it also affects many other parties, including suppliers. The strike at other Ford plants has resulted in 13,000 layoffs across nearly 90 suppliers, according to Chief Supply Chain Officer Liz Door.
Over 600 parts supplier locations and thousands of supplier jobs work with KTP, Door said.
“The fragile supply chain will be nudged further toward collapse with this strike at Kentucky Truck Plant,” Door said.
Ford employs more than 12,000 people in Kentucky and supports a state GDP contribution of nearly $12 billion. Every Ford employee supports 11 other jobs, according to a study by Boston Consulting Group. That means the absence of approximately 9,000 workers at KTP could impact roughly 100,000 families in the broader economy.
Nearly 2,000 employees have already been laid off at other plants that associate with KTP since the strike started.
“We know UAW leadership set out to wound Ford for months, but this goes way beyond just hitting Ford’s profits,” Galhotra said.
Once a deal is reached and the strike is resolved, it will still have a continued impact, because bringing a plant back up is much more difficult than taking it down, according to Vice President of America’s Manufacturing Ford Blue Bryce Currie.
What’s being offered?
UAW workers are some of the best paid auto workers in the world, according to a study by the Wall Street Journal. Nearly 85% of permanent hourly employees at Kentucky Truck earn the top wage rate of $32 an hour, according to Currie.
Galhotra said the offer they made to UAW would be record setting and widen that gap substantially.
“Our offer includes unprecedented improvements in wages,” Galhotra said. “This offer would put employees among the top 25% of all U.S. jobs, hourly and salary.”
According to Ford, the offer extended to the UAW included more than 20% wage increases for permanent employees. It also included traditional cost-of-living allowances and faster wage progression. A new hire will make six figures by their fourth year, Ford said.
The offer also included profit sharing and full ratification bonuses for temporary employees, something that has never been offered before, according to Ford. The offer also featured health and retirement benefits and more time off.
UAW President Shawn Fain said the union’s bargaining committee went to Ford Headquarters in Michigan Wednesday in hopes of striking a new deal. The committee previously met with Ford two weeks prior and declined an offer from Ford.
Ford told the committee there was more money to be included in the deal since their last meeting two weeks ago, according to Fain.
When the committee met with Ford on Wednesday, the offer remained the same, prompting Fain and the committee to call on workers at KTP to shut down the plant and join the strike.
“We didn’t wait until Friday and we didn’t wait a minute,” Fain said. “We then called President Todd Dunn at local 862 and he and his local leadership walked 8,700 members off the job, and of course they had the unwavering support of regional director Tim Smith.”
Fain said they’re entering a new phase of the strikes and it demands a new approach.
“We’re done waiting until Fridays to escalate our strike,” Fain said. “Today we’re not announcing expansion of our strike, but we are prepared at any time to call on more locals to stand up and walk out.”
Putting more money on the table would risk the Ford’s ability to investment into the company in the future, Galhotra said. Galhotra added Ford has reached the max of what it can offer.
“We’re open and willing to work with them within that framework, within a certain amount of total cost of the deal that might fit their needs better,” Galhotra said.
Fain said he found Galhotra’s statement to be pathetically ironic.
“You know who’s reached their limit? The tens of thousands of Ford workers with no retirement security. You know who stretched themselves? The Ford workers who didn’t get a single raise for a decade,” Fain said.
Fain pointed out how KTP generates $48,000 a minute, a figure that is higher than thousands of workers’ yearly income. He hopes a deal is reached soon, one that the union approves of.
“Taking out Kentucky truck sent a very clear message not only to Ford, but to GM and Stellantis as well,” Fain said. “Don’t you dare slow-walk us or low-ball us. We will take out whatever plants they force us to.”
Kentucky’s gubernatorial candidates said Wednesday they’re hopeful Ford and UAW can reach a quick agreement to end the strike.
