+++ FORD ’s blockbuster announcement last week that it would build 4 sprawling new factories in Kentucky and Tennessee by 2025 and hire nearly 11.000 workers raised a big unanswered question: Just how good will those jobs be? No one (not Ford, not the United Auto Workers union, not the future job holders themselves) yet knows how much the workers will be paid or whether they will vote for union membership. 3 of the plants, to be built with Ford’s South Korean corporate partner, SK Innovation, would produce batteries for 1 million electric vehicles annually. A 4th would make the next generation of electric F-Series pickup trucks, a version of America’s top-selling vehicle. The new factories represent an $11.4 billion bet by Ford on a vision for the future in which tens of millions of drivers will shift from pollution-belching internal combustion engines to electric vehicles that emit nothing from the tailpipe. The stakes are high for Ford’s employees as well as for the UAW, which is counting on ensuring union membership at battery factories to replace jobs that will be lost should the transition to electric vehicles happen as Ford and others envision. Union workers generally are paid, on average, 20% more than their nonunion counterparts, typically receive more generous benefits and wield a larger voice on safety and other workplace rules at their factories. When Ford’s plans were announced, CEO Jim Farley stopped short of publicly supporting the UAW, saying only that union representation at the plants would be decided by the workers themselves. In Kentucky and Tennessee, states in which unions have often been shunned by workers and opposed by political leaders, representation by the UAW is far from assured. Ford said it expected to continue a “strong, mutually beneficial” relationship with the UAW. “We respect the UAW’s efforts to organize future hourly workers at the new facilities coming to Tennessee and Kentucky”, Ford and SK said in statements. By stopping short of offering explicit support for union membership at its new plants, experts say, Ford may be trying to appease politicians who have been vocal opponents of union organizing. Political leaders in both states still have to approve money for worker training and other incentives to Ford, said Dan Cornfield, who teaches sociology and political science at Vanderbilt University in Nashville, and the company wouldn’t want to jeopardize that support. “The company is in between its union partners and its state government partners in this”, Cornfield said. “So they probably are not speaking out about unionization one way or the other because they don’t want to antagonize their longstanding partners”. Not to mention rankle president Joe Biden, who has frequently promoted an industry-wide transition to electric vehicles as a vital way to counter climate change and create “good-paying union jobs”. A letter attached to Ford’s national contract with the UAW pledges that the company will remain neutral when the union tries to organize any new factories. It will agree to “card check” sign-up efforts, which let unions recruit workers to sign cards saying they want to be represented. Once 51% of workers sign on, the plant becomes union. Generally, that’s the union’s favored way of organizing plants. But in Southern states, card check doesn’t mean automatic union factories. Kentucky and Tennessee have “right-to-work” laws, which bar companies from signing deals that force workers to pay union dues. In Tennessee, in particular, political leaders, including Republican governor Bill Lee, have fought the UAW, which lost recent factory-wide organizing votes at a Volkswagen plant in Chattanooga. In opposing the UAW, Lee argued that union membership would make it harder for the state to recruit other manufacturers. “It is more difficult to attract companies into states that have a high level of organized union activity”, Lee said ahead of a 2019 vote at VW. “For that reason, I think that Volkswagen remaining a merit shop facility is beneficial to the economy of Tennessee”. Difficult as it is, union organizing in the South is not impossible. The UAW already represents nearly 16.000 hourly workers at 2 Ford plants in Louisville and at a General Motors complex in Spring Hill, Tennessee. UAW President Ray Curry, who attended the Tennessee ceremony this week, said he didn’t think Ford had chosen sites in Stanton, Tennessee, and Glendale, Kentucky, to avoid the UAW. He expressed optimism about organizing the new factories. “We’ve got a long-term working relationship with Ford”, Curry said. “It’s just a great opportunity to continue in that relationship”. Todd Dunn, president of the UAW local office in Louisville, sounded hopeful, too. He said he regarded the remarks this week by Ford’s CEO Farley as cautionary in a politically charged environment. “I think that might be them saying, ‘Hey, in a right-to-work state, we’re going to make sure they (workers) have their choice’ “. The union, Dunn said, will campaign on a promise to seek better wages and benefits, health and safety advocacy and a greater voice for workers. The new Ford site in Stanton, Tennessee, lies in rural Haywood County, about 50 miles east of Memphis, one of only a few counties in the state that voted for Biden in the 2020 election. That bodes well for union organization, Vanderbilt’s Cornfield said. Unions historically have succeeded in the South, he said, when they organize branch operations of companies from the North that already are unionized. “On the other hand”, Cornfield noted, “the Southern political climate in terms of government tends to be Republican and opposed to unionization”. Tennessee’s “right to work” law has existed for more than 7 decades. Republican state lawmakers have already established a question for the 2022 ballot asking voters whether that law should be enshrined in the Tennessee Constitution, further complicating the conversation for Ford. So far, Republican U.S. senators Bill Hagerty and Marsha Blackburn haven’t publicly opposed a union at the Ford facilities, which are still years away from opening. But both stressed the state’s right-to-work law, with Hagerty saying he hopes future workers who will decide whether to unionize “will be mindful of the pro-business, pro-competition and pro-worker policies of Tennessee”. The Ford plants could raise the standard of living in Haywood County and those surrounding it. Workers at union auto assembly plants earn an average of around $32 an hour, compared with the national average auto manufacturing wage of $25. But in Tennessee, Cornfield said, auto manufacturing workers are paid an average of only $19 an hour, Auto companies generally want to pay less at plants that make parts, such as batteries, rather than assemble vehicles. But the UAW will seek assembly-plant wages at those facilities. It may be easier for the union to organize in Kentucky, a solidly red state but one with a Democratic governor who supports the UAW. Glendale is about 50 miles south of Louisville, a union stronghold that includes the only unionized teachers in the state, said Kenneth Troske, an economics professor at the University of Kentucky. The state has some history with unions in coal mining and auto production and only recently, in 2017, did it pass a “right to work” law. But it has voted solidly Republican of late. And a huge Toyota factory in the center part of the state has remained nonunion. “We used to be a pretty strongly pro-union state”, Troske said. “That certainly has changed. We are Republican. We are as red as red gets now”. +++
+++ HONDA began selling new cars online, becoming the first major Japanese automobile manufacturer to allow customers in the domestic market to complete the whole purchase process online, from consultation to contract. The service is only being offered to Tokyo residents initially and will be expanded nationwide in the future. Honda hopes to cultivate demand from customers who want to avoid face-to-face service amid the coronavirus pandemic, and from younger people. Online car sales have already been introduced overseas by such automakers as electric vehicle giant Tesla, Toyota and Nissan have set up a system in the United States that allows customers to complete the purchase of new cars online. On a website operated by a subsidiary of Honda, customers can select a car model, decide on options and apply for a car loan. Customers only need to go to the showroom when taking delivery of their cars. The vehicles available for online purchase will be mainstay models with high sales volume. Nissan will also allow customers in Japan to finish purchases online of its new Ariya electric sport utility vehicle, which is scheduled to go on sale this winter. +++
+++ Production has begun at a new MAZDA TOYOTA auto plant in north Alabama and the companies running the facility continue to hire workers at a brisk pace. Work on the first 2022 Corolla Cross vehicles began with the press of a button at the Mazda Toyota Manufacturing, a joint venture between Mazda and Toyota. In 2018, the Japanese automakers selected Huntsville, Alabama, for the mammoth facility that will eventually have the capability to produce up to 300.000 vehicles per year, split evenly between Mazda and Toyota. The joint venture said it was in the middle of hiring another 1.700 workers and anticipates reaching up to 4.000 employees once production is in full operation next year. “This is the moment MTM and our North Alabama community have waited for since we broke ground in November 2018”, said Mark Brazeal, a vice president at the facility. “We are excited to see Corolla Cross in dealerships across the U.S”. More than $2.3 billion has been invested in the plant and the companies last year committed another $830 million to ensure cutting-edge technologies could be worked into its manufacturing processes. +++
+++ NISSAN has expanded its Michigan-based engineering center, Nissan Technical Center North America (NTCNA), with a more than $40 million dollar Safety Advancement Lab for vehicle safety testing. The new lab brings more efficiency to the vehicle development process and furthers Nissan’s goal of reaching a future with virtually zero fatalities. “This expansion underscores Nissan’s commitment to the region and enables us to be a global center of excellence for new vehicle testing”, said Chris Reed, regional senior vice president, Research and Development, Nissan Americas. “The goal of virtually zero fatalities is always guiding our work. The combination of this new lab plus our passive and active safety technologies can help us reach that goal”. The Safety Advancement Lab expansion provides Nissan the onsite capability to conduct full vehicle crash testing, vehicle certification, advanced development testing and benchmarking. Engineers can conduct 48 different passive safety crash test simulations onsite, creating efficiencies in timing and results analysis. The 116.000 square feet facility is equipped with state-of-art, high-speed photography systems, data acquisition equipment and a precise vehicle tow system. The site also includes a test dummy calibration lab, space for preparing vehicles and a pedestrian safety lab. Nissan has been a pioneer in electrification since the launch of the all-electric Leaf in 2010, and is currently targeting 40 percent of U.S. sales to be electric by 2030. The new Safety Advancement Lab is outfitted to evaluate the integrity of high-voltage EV batteries, using more than a decade of best practices to drive Nissan toward that electrified future. “Here in the Safety Advancement Laboratory, we’re focused on passive safety”, says Mike Bristol, director, Vehicle Safety Test Engineering, NTCNA. “Our vehicles come equipped with technology to help prevent a crash, but in the event that there is a collision, we’re focused on helping protect customers from injury and evaluating the vehicle structure performance, airbag performance, seatbelt performance and other mechanisms that help protect our customers”. +++
+++ Demand for Tesla ’s mid-sized models helped push up electric car sales in NORWAY to nearly 80 % of total car sales last month, data showed. The country has been a global leader in switching to electric vehicles and seeks to become the first to end the sale of petrol and diesel engines by 2025. Battery electric vehicles made up 77.5 % of all new cars in September, the Norwegian Road Federation (OFV) said, up from 61.5 % a year ago. The Tesla Model Y was the top selling vehicle with 19.8 % of the car market followed by the company’s Model 3 sedan with 12.3 %. Skoda’s Enyaq was a distant third at 4.4 %. First unveiled by California-based Tesla in March 2019, the Model Y was only recently made available to European customers. By exempting fully electric vehicles from taxes imposed on those relying on fossil fuels, oil-producing Norway has become a leader in ending the use of combustion engines, and in 2020 EVs outsold all other cars for the first time. However, Norway’s zero-tax policy could change if the centre-left winners of last month’s national election go ahead with plans to tax the most expensive models. The next government is expected to be headed by Labour’s Jonas Gahr Stoere, and will be made up of parties which have vowed to introduce 25 % VAT on the fraction of the price tag of a new car that exceeds 600,000 Norwegian crowns ($69,300). While Tesla’s Model Y, costing less than the tax threshold, may be unaffected, the company’s high-end S and X models are priced at up to 1.3 million crowns and could face substantial levies. Porsche, Audi and Mercedes-Benz would also be affected. Labour says the tax will bring in extra cash to state coffers and is motivated by a sense of fairness. The tax exemption for electric car purchases was meant as a way to introduce new technology, and can’t last indefinitely, said Skein Road Hansen, a Labour tax policy spokesman. “It is a subsidy. And the more expensive the car is, the bigger the subsidy”, he said. “We have in the last couple of years received a lot of new models. There is plenty to choose from for those who still want to buy a car while there is a VAT exemption”, Hansen added. A tax on electric luxury vehicles would be ill-timed and ultimately slow Norway’s electrification, said Christina Bu who heads the Norwegian EV Association, an interest group. Even in the northernmost part of the country with freezing temperatures in winter and reindeer roaming the streets, electric car sales have recently been outselling those powered by petrol, diesel and hybrid engines, Bu said. “Now finally the more rural areas are starting to buy more electric cars and it’s not the time now to remove the tax exemption because we need to also get these areas with higher market shares”, she added. +++
+++ SSANGYONG said Friday its sales plunged 40 % last month from a year earlier on weaker domestic demand. SsangYong sold 5.950 vehicles in September, down from 9.834 units a year earlier, the company said in a statement. Domestic sales dropped 53 % to 3.859 units last month from 8.208, while exports rose 29 % to 2.091 units from 1.626 during the same period, it said. From January to September, sales fell 17 % to 61.854 autos from 74.707 during the same period of last year. SsangYong’s lineup consists of the Tivoli, Korando, Rexton and Rexton Sports. The SUV-focused carmaker has been in a debt-rescheduling process since April 15 as its Indian parent Mahindra failed to attract an investor amid the prolonged Covid-19 pandemic and its worsening financial status. It filed for court receivership in December 2020 after failing to obtain approval for the rollover of 165 billion won (US$148 million) of loans from creditors. SsangYong and EY Hanyoung, an accounting firm, plan to select a preferred bidder and a secondary preferred bidder for the financially troubled carmaker this month. 3 bidders (the Edison Motors led consortium, another local consortium led by EV firm Electrical Life Business and Technology (EL B&T) and Los Angeles-based EV maker Indi EV) joined the auction to acquire SsangYong. +++
+++ In the UNITED STATES , in a normal month before the pandemic, Con Paulos’ Chevy dealership in Jerome, Idaho, sold around 40 new vehicles. In September, it was only 6. Now he’s got nothing new in stock, and every car, pick-up or SUV on order has been sold. Last month, what happened at his dealership about 185 kilometers southeast of Boise was repeated across the country as factory closures due to a worsening global shortage of computer chips crimped U.S. new vehicle shipments. Forecasters expect that September sales fell around 25 % from last year as chip shortages and other parts-supply disruptions cut into the selection on dealer lots and raised prices once again to record levels. That sent many frustrated consumers to the sidelines to wait out a shortage that has hobbled the industry since late last year. J.D. Power expects that U.S. automakers sold just over 1 million vehicles in September, for an annual sales rate of 12.2 million. That’s 4 million lower than last year’s annual rate for September, and 4.9 million below the rate in September of 2019. For the third quarter, J.D. Power expects sales to fall just over 13 % from the same period a year ago. Automakers are reporting some pretty poor numbers. General Motors, which only reports sales by quarter, said its deliveries were off nearly 33 % from July through September of last year. Stellantis, formerly Fiat Chrysler, saw quarterly sales dip 19 %, while Nissan sales were down 10 % for the quarter. Honda’s U.S. sales fell almost 25% last month, and were down 11% for the quarter. At Toyota, sales were off 22 % for September but up just over 1 % in the third quarter. Hyundai reported sales off 2 % last month but up 4 % for the third quarter. Volkswagen third-quarter sales were down 8 %. “September results show that there are simply not enough vehicles available to meet consumer demand”, said Thomas King, president of data and analytics at J.D. Power. The average sales price of a new vehicle hit a record $42.802 last month, breaking the old record of $41.528 set in August, J.D. Power said. The average U.S. price is up nearly 19 % from a year ago, when it broke $36.000 for the first time, J.D. Power said. The auto price increases have helped to drive up U.S. inflation. General Motors, hit hard by temporary plant closures last quarter, expressed some optimism, though. Steve Carlisle, president of GM North America, said the computer chip shortage is improving. “As we look to the fourth quarter, a steady flow of vehicles held at plants will continue to be released to dealers, we are restarting production at key crossover and car plants, and we look forward to a more stable operating environment through the fall”, he said in a statement. The shortage and crazy high prices for both new and used vehicles began with the eruption of the pandemic last year, when many states issued stay-at-home orders. Prices plummeted, and automakers shuttered factories for 8 weeks. The resulting decline in supply came just as many cooped-up consumers wanted a new or used vehicle to commute to work or to take road trips without coming in contact with others. While the auto plants were shut down in April and May last year, computer chip makers shifted production to satisfy wild demand for laptops, gaming devices and tablets. That created a shortage of automotive-grade chips, a problem that might not be fully resolved until next year. Because of the high prices, dealers big and small are reporting record profits, but Paulos fears those days might be over. He’s paying the bills and making money with used car sales, as well as service as people keep their vehicles longer. He’s hoping the new auto shortage has hit bottom and says GM appears to be bringing more factories back online. “We won’t be having any inventory to show people here”, Paulos says. “If we don’t get some supply to the dealers, the record profits we were making are going to turn into record losses, I’m afraid. It’s hard to sustain yourself with no new flow”. +++
+++ VOLVO has announced its long-awaited plans for an initial public offering as the Swedish carmaker seeks to capitalise on a rise in premium sales and the growth of its all-electric Polestar brand. The intention to float on Nasdaq Stockholm could value Volvo above 30 billion dollar, according to people familiar with the matter, with about 10 billion dollar of that figure attributed to the carmaker’s 50 % stake in Polestar, which is set to go public itself through a special purpose acquisition company at a valuation of 20 billion dollar. That would leave the remaining part of Volvo, which sold more than 700.000 vehicles in 2019, valued at a minimum of $20 billion, in line with the market value of larger premium competitors BMW and Daimler. However, it is unlikely that Volvo will be valued lower than Polestar. A float would provide a large return to owner Geely which bought the ailing company for 1.8 billion dollar from Ford in 2010. An attempt to float Volvo in 2018 was abandoned by Geely because of fears that a trade war between the US, Europe and China would hurt the company’s valuation. At the time, Geely originally believed it could fetch 30 billion dollar for the brand. Volvo’s chief executive Håkan Samuelsson said then that the “conditions right now are not optimal to give certain upside for the investors”. The less erratic Biden administration might have given the Swedish car brand a more stable window to hold an IPO, people familiar with the matter speculated. The company has been faring well in recent months. It posted its best-ever first-half results in July despite the global shortage of semiconductors that has affected the auto industry. However, it revealed that sales in September had dropped by 30,2 % year on year, largely due to a shortage of components. But production has picked up again late in the month. Volvo Cars said that it sold 47.223 cars in September, down from 67.636 in the same month last year. In China, the company reported a sales decline of 43.9 % in September to 9.696 cars. U.S. sales fell 9.0 % to 9.350, while sales in Europe fell 41.5 % to 18.089 cars from 30.906 in September last year as sales were heavily affected by a lack of available cars, primarily in markets such as Sweden, the United Kingdom, Belgium and Italy. “The demand for Volvo’s products remained strong”, Samuelsson said. Volvo’s Recharge range of chargeable models accounted for 26.9 % of all cars it sold globally in September. Volvo has one of the most ambitious electrification plans among large carmakers, pledging to sell only electric vehicles by 2030. Rival Daimler, for example, has said it will be ready to go all-electric by the same date “where market conditions allow”. Volvo has also outlined plans to imitate sales of models of electric vehicle start-ups by selling cars directly to consumers, rather than through dealerships, eliminating price fluctuations in the process. Polestar, which was spun off from Volvo 4 years ago and is backed by actor Leonardo DiCaprio, said last week that it would combine with Gores Guggenheim, a Spac backed by billionaire private equity investor Alec Gores and Guggenheim Capital. The company, which competes with Tesla, said it would expand from the 14 markets it is in at present to 30, and would focus especially on the Asia-Pacific region. +++