Ford is reducing its commitment to a planned Marshall-area electric vehicle battery facility by 800 jobs and more than $1 billion, moves that will reduce the plant's production capacity by roughly 40%.
But the Dearborn automaker is resuming work at the site after a two-month pause and still intends to meet its goal to open the plant by 2026, a company spokesman said Tuesday.
The announcement represents a drastic shift from the promised 2,500 jobs and $3.5 billion investment revealed earlier this year by Ford and Gov. Gretchen Whitmer. Ford spokesman Mark Truby acknowledged the company's cuts also almost certainly mean the state will reduce the roughly $1.8 billion promised in taxpayer subsidies for the megadevelopment.
"We've been studying this project for the past couple of months. I think we're all aware EV adoption is growing, and we expect that to continue, actually. But it's not growing at the pace that I think ourselves and the industry had expected," Truby said.
"We want to be really disciplined about how we allocate capital and think about matching production and future capacity based on demand."
Truby said Ford originally anticipated the facility would produce 35 gigawatt hours worth of batteries annually, enough to equip about 400,000 vehicles. Now, the company expects the plant will be at 20 gigawatt hours, representing a roughly 42% reduction in output — approximately enough batteries for 230,000 vehicles.
While Truby would not say exactly how much it planned to cut from the $3.5 billion investment, he did say it correlated with the cut in output. At 42%, that would mean cutting almost $1.5 billion, shifting the total investment to $2 billion.
The company also intends to use less space at the site, which currently comprises hundreds of acres just west of Marshall, a small town that's 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, focused on the fact Ford still plans to invest at the site and not on the cuts.
Asked later Tuesday about possible changes to the Ford incentive package, Whitmer said some should be expected.
"As Ford has had to make some changes, we’ve had (a) very clear, open line of communication and the state’s role will change as well, right? When one aspect gets re-sized so does the other. I won’t get ahead of MEDC, they’re doing their work, but that wouldn’t be a surprising outcome," Whitmer said, when asked about the Ford incentives after an event in Livonia.
MEDC spokesman Otie McKinley said incentives for the project "will certainly be revised in accordance to the new investment parameters."
At this point, McKinley anticipated Ford and the MEDC will come together to get a proposal on a reduced subsidy package that could be presented to the Michigan Strategic Fund board, an entity that authorizes incentives. It's still unclear whether any changes will ultimately require legislative action.
Michigan House Republican Leader Matt Hall, R-Richland Township, suggested lawmakers could push to nix proponents of the subsidies altogether.
"If the original proposal misrepresented Ford’s plans, the hundreds of millions of dollars tied to job creation should be revoked under the contract. The governor must right-size state funding and ensure taxpayers aren’t left on the hook for her failure," Hall said in statement Tuesday.
McKinley confirmed while Ford and the state had the framework for a deal, they never executed a final agreement for the project. Such agreements take months, if not more than a year, to finalize.
In late September and amid the UAW strike, Ford caught some policymakers and industry observers off guard when it announced "pausing work and limiting spending on construction" at the Marshall-area plant. Ford spokesman T.R. Reid said at the time the company's work would not recommence "until we’re confident about our ability to competitively operate the plant."
That did not stop large 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, head of the Marshall Area Economic Development Alliance, a local entity working with MEDC on the site, said in a statement during Ford's pause that site work continued on roads, wastewater systems and other utilities.
"We are pleased to see Ford resume work to build the BlueOval facility that will create 1,700 local jobs," he said.
On Tuesday, Truby explained what led Ford to formally resume its own work at the site.
"We're making some strategic decisions, and this would be just another one of those where we're moving forward. But we're trying to kind of right-size the investment and the footprint," Truby said, referencing a previously announced delay in investing $12 billion toward EV production.
"There were a number of factors. Obviously, it helps to have some certainty around, you know, we're no longer in a strike situation and we understand what our labor costs are going to be, by and large."
The project is a key piece in a larger policy championed by Whitmer and state economic development officials. They argue using hundreds of millions in public tax dollars to subsidize such megadeals will ultimately result in revitalizing communities and jump-starting industries key to Michigan's future.
While some local residents champion the site, others are aggressively campaigning against it. Many local residents oppose what they consider a lack of transparency around the project, while others have concerns about possible environmental impacts.
Some attack Ford's partnership with CATL, a Chinese company and the world's largest battery manufacturer, at the site. They suggest, without evidence, that there is a nefarious connection between CATL and the Chinese government.
Truby confirmed Ford still intends to work with CATL at the site, noting the 1,700 promised jobs will all be positions with Ford.