Ford is reducing its commitment to a planned Marshall-area electric vehicle battery plant by 800 jobs and more than $1 billion, a move that will reduce the plant’s production capacity by about 40 percent. But the Dearborn automaker still intends to meet its goal of opening the plant by 2026, a company spokesperson said Tuesday.
The announcement represents a dramatic departure from the 2,500 jobs and $3.5 billion in investments promised earlier this year by Ford and Gov. Gretchen Whitmer. Ford spokesman Mark Truby acknowledged that the company’s budget cuts would almost certainly mean the state would reduce the roughly $1.8 billion promised in taxpayer subsidies for the megadevelopment.
“We’ve been looking at this project for a few months. I think we’re all aware that electric vehicle adoption is increasing, and we expect that to continue, actually. But it’s not growing at the rate that I think we’re “myself and the industry what I expected,” Truby said.
“We want to be very disciplined in how we allocate capital and think about the adequacy of production and future capacity based on demand.”
Truby said Ford initially anticipated the facility would produce 35 gigawatt hours of batteries per year, enough to power about 400,000 vehicles. Now, the company expects the factory to produce 20 gigawatt hours, which represents about a 42% reduction in production – or about enough batteries for 230,000 vehicles.
Although Truby would not say exactly how much he planned to reduce the $3.5 billion investment, he did say it was linked to the reduction in production. At 42%, that would mean a reduction of nearly $1.5 billion, to create a total new investment of $2 billion.
The company also intends to use less space at the site, which currently spans hundreds of acres just west of Marshall, a small town about 35 miles east of Kalamazoo.
Representatives for Whitmer and the Michigan Economic Development Corporation, the state entity that oversees incentives for this deal and other megasites, both focused on the fact that Ford still plans to invest in the site and not on the reduction of promised investments or jobs created.
“Today’s announcement means the creation of 1,700 new jobs in Michigan as well as billions in additional investment in the state, which will help grow the economy and put more money back into citizens’ pockets,” said Stacey LaRouche, Whitmer’s spokeswoman.
MEDC spokesperson Otie McKinley said incentives for the project “will certainly be revised based on the new investment parameters.”
At this point, McKiney expects Ford and Mnd MEDC to come together to submit a proposal on reduced subsidies to the board of directors of the Michigan Strategic Fund, the entity that authorizes the incentives. It remains unclear whether any changes will ultimately require legislative action.
The announcement confirms that Ford is resuming work at the plant; Nearly two months ago, the company suspended the heavily subsidized project due to uncertainty over the UAW strike.
In late September, Ford caught some policymakers and industry observers off guard by announcing it would “suspend work and limit construction spending” at the Marshall-area plant. Ford spokesman TR Reid said at the time that the company’s work would not resume “until we are confident of our ability to operate the plant competitively.”
This did not stop major contractor Walbridge from continuing site preparation; it received a contract worth up to $178 million to ensure the infrastructure is ready for Ford.
Jim Durian, director of the Marshall Area Economic Development Alliance, a local entity working with MEDC on the site, said in a statement during Ford’s hiatus that work continued on roads, wastewater treatment systems and d other public services.
“We are pleased to see Ford resume construction work on the BlueOval factory, which will create 1,700 local jobs,” he said.
On Tuesday, Truby explained what led Ford to officially resume its own work at the site.
“We’re making strategic decisions, and this would be just another one where we move forward. But we’re trying to right-size the investment and the footprint,” Truby said, referring to a previously announced decision. delay in the $12 billion investment in electric vehicle production.
“There have been a number of factors. Obviously it’s helpful to have some certainty, you know, we’re no longer in a strike situation and we understand what our labor costs are going to be, in the ‘together.”
The project is a key part of a broader policy championed by Whitmer and state economic development officials. They argue that using hundreds of millions of public tax dollars to subsidize such megaprojects will ultimately result in revitalizing communities and restarting industries critical to Michigan’s future.
While some local residents defend the site, others are waging an aggressive campaign against it. Many local residents object to what they see as a lack of transparency around the project, while others are concerned about possible environmental impacts.
Some on the site attack Ford’s partnership with CATL, a Chinese company and the world’s largest battery manufacturer. They suggest, without evidence, that there is a nefarious connection between CATL and the Chinese government.
Truby confirmed that Ford still intended to work with CATL on the site, emphasizing that the promised 1,700 jobs would all be Ford positions.
This is a developing story. Check for updates as they become available.
Contact Dave Boucher at email@example.com and on X, formerly called Twitter, @Dave_Boucher1.