Ford is reducing its commitment to a planned Marshall-area electric vehicle battery facility by 800 jobs and more than $1 billion dollars, a move that will reduce the plant’s production capacity by roughly 40%. But the Dearborn automaker 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 announced 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, to create a new $2 billion in total investment.
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, both focused on the fact Ford still plans to invest at the site and not on the reduction in promised investment or jobs created.
“Today’s announcement means 1,700 new jobs coming to Michigan along with billions of additional investment to the state, which will help grow the economy and put more money back into people’s pockets,” said Stacey LaRouche, a Whitmer spokeswoman.
MEDC spokesman Otie McKinley said incentives for the project “will certainly be revised in accordance to the new investment parameters.”
At this point, McKiney anticipated Ford and Mnd MEDC will come together to get a proposal on a reduce subsidy package to the Michigan Strategic Fund board, the entity that authorizes incentives. It’s still unclear if any changes will ultimately require legislative action.
The announcement confirms Ford is restarting work at the plant; almost two months ago the company paused the heavily subsidized project amid the uncertainty of the UAW strike.
In late September, 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 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 jumpstarting 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.
This is a developing story. Check for updates as they become available.
Contact Dave Boucher at [email protected] and on X, previously called Twitter, @Dave_Boucher1.