Thu. Jun 20th, 2024

As electric vehicle demand slows, workers caught in the middle face an uncertain future

By 37ci3 Feb12,2024

It’s going to be a good year for workers at the GM Orion Assembly plant in Detroit’s working-class suburbs. After winning a pay raise following last year’s United Auto Workers strike, they plan to begin production of GM’s marquee product later this year: the electric Chevy Silverado pickup truck.

But like thousands of other workers on the front lines of the transition to electric vehicles, they’ve hit some roadblocks along the way. GM told about 1,000 workers at the Orion plant in December that they would be laid off through the end of 2025 amid engineering improvements and cooling requirements for electric vehicles. Their last paycheck was holiday pay for the week of Christmas and many are still waiting to find out if they will be offered jobs at another plant.

“It was a very sad moment here last month,” said a plant worker who spoke on condition of anonymity because he was not authorized by GM to speak to the media. “We thought we finally got a little break. We had to work a year at most for the resupply, and now GM is revisiting the EV market. I don’t think the economy is hurting – I think the auto industry is. I think they put the cart before the horse.”

While sales of electric vehicles continue to grow, demand has fallen sharply in 2022 and 2021, leading automakers including industry leader Tesla to forecast lower sales this year. That has put thousands of workers at risk, setting back some of their lofty electric car ambitions on which US automakers have spent billions of dollars in recent years.

“Ultimately, it all comes down to demand, and demand isn’t getting where all these CEOs think it is. So a lot of the initial targets that were set by GM or Ford a few years ago have proven to be maybe a little too optimistic and too aggressive,” said Gabe Daoud, senior renewable energy analyst at TD Cowen. would expect the car fleet to change overnight and go electric, but that is obviously impossible and impossible.”

In January, Ford, along with GM, said it would reduce production of the F-150 Lightning electric truck. don’t slow down The demand eliminated 1,400 workers from the production line in Dearborn, Michigan, starting in April. Ford he said most of those workers will be reassigned at the same complex, transferred to other plants that produce gas-powered vehicles, or offered early retirement.

Hundreds of Electric vehicle battery factories in Michigan, Georgia and California have also laid off workers in recent months. So does Albemarle, North Carolina-based, which supplies lithium to battery makers he said In January, it cut an unspecified number of jobs due to changing market conditions.

Ford said it would happen last fall A delay of nearly $12 billion previously announced EV costs pushed back construction of one of two Kentucky battery plants and scale back Plans for battery plant in Michigan to employ 1,700 workers, up from 2,500 planned.

Demand for electric vehicles continued to grow, with 317,000 EVs sold in the fourth quarter of 2023, according to Cox Automotive. But the pace of this growth has slowed from 2021 and 2022, when the industry saw annual growth of 70% and 80%. Over the past three years, companies have poured billions into electric vehicle investments, backed by incentives pushed by the Biden administration.

Analysts attributed the slowdown in demand mainly to rising car loan interest rates and consumer concerns about the lack of charging infrastructure.

“I think what you’re seeing is a shift in how quickly people are willing to buy EVs right now because they’re expensive and there’s a concern about charging infrastructure,” said Alan Amici, CEO of the Center for Automotive Research. “If you’re an efficient carmaker, you try to match production to demand. “It is not good for anyone to fill their yard with unsold electric cars.”

Analysts say the industry faces further uncertainty with the upcoming US presidential election, where electric car incentives introduced under the Biden administration could be rolled back or suspended during a second Trump administration.

The layoffs follow a victory last fall when auto workers won more than a 25% pay raise and other benefits after a more than month-long strike. Art Wheaton, director of labor research, said the new deal offers additional benefits to protect laid-off workers, such as allowing easier transfers to factories that make electric batteries and includes incentives for early retirement if automakers have to cut workforces. at Cornell University.

“In the collective agreement they just negotiated, the UAW was primarily focused on job security,” Wheaton said.

At the Orion plant, workers expected layoffs for much of 2024 as the plant switches production from the Chevy Bolt to the new electric Silverado, but many were caught off guard when GM announced in December that those layoffs would be extended. an extra year, the factory worker said.

“It’s very devastating, not just for our workforce, but for the whole community there,” said a plant worker. “Business was growing, things were looking good and people were happy. We received nothing but support from the settlement, and all this money came from the state, and then they do it.”

The plant, which has been through ups and downs since its construction in the 1980s, was the center of much hype just two years ago. Michigan Governor Gretchen Whitmer and GM officials at a press conference announced the company’s plan to spend $4 billion to expand and renovate the facility to make the electric Silverado truck, as part of a broader $7 billion investment in the state that GM says will support 5,000 jobs.

In exchange for GM’s investment, the state of Michigan gave the company hundreds of millions of dollars in grants, money for infrastructure and utility improvements, and state and local tax credits.

GM plans to offer all of the laid-off workers jobs at other plants in Michigan, and about half have already been or are in the process of being reassigned, GM spokesman Kevin Kelly said.

But the commute could be stressful for some workers, including those who commute more than an hour to reach the Orion plant and others who cannot make the longer commute due to family or child care commitments, a plant employee said.

For UAW workers not assigned to another plant, GM will provide up to two years of state unemployment compensation, which is 84% ​​of their normal wages, along with health coverage, Kelly said.

These benefits would not apply to non-GM workers at the plant not covered under the UAW contract with GM, such as maintenance, sanitation and safety workers.

Despite the layoffs and production delays, local officials still expect the planned investment in the plant to be a boon to the working-class community, which still clings to the slogan “to live is a holiday” from the 19th century. – the tourist destination of the century.

Orion Township Supervisor Chris Barnett said several suppliers that will make components for the EV Silverado, such as seats and beds, continue to plan to build new facilities nearby despite production delays, and the project has also helped attract hotels and other businesses. restaurants.

While Barnett said he was disappointed to hear that production was pushed back, he wasn’t surprised given the amount of construction that had to happen in relatively short order to meet the EV Silverado’s planned 2024 launch. He said that the work at the plant is going on and he was there recently for a meeting.

“While no one is excited about it being kind of delayed, I don’t feel like this project is going to be abandoned or shelved,” Barnett said. “When this news came out, we were all like that inside, it makes sense. There was no one who said, “The sky is falling.” There was no panic.”

In Hardin County, Kentucky, officials are in a similar position. Ford was expected to open two battery plants there, one in 2025 and another in 2026, which would employ 5,000 workers. But in October, the company said it was delaying the opening of a second plant due to declining demand for EVs.

Still, local officials expect a big boost to the economy from a plant that will create at least 2,500 jobs and transform a rural community about an hour from Louisville, said Hardin County Judge/Executive Keith Taul.

“It completely changed everything about the area where these two huge buildings were,” Taul said. “I’ve been in the automotive industry for 30 years, I’ve traveled the world and so I’ve seen some big projects. But it has to be one of the biggest I’ve ever seen.”

Several suppliers are already moving to the area to be closer to the plant, Taul said, and developers are eyeing the area for housing, expecting thousands of workers to eventually move to the area. The delay of the second plant will help give the community more time to prepare for the influx of workers the county expects.

“There are going to be bumps in the road for something new like this,” Taul said. “I think most people understand that Ford and their partner are not going to make a zillion batteries that aren’t going to sell. They must satisfy the demand there.”

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By 37ci3

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