'Kentucky is the new Michigan.' What Ford deal means for growth in state

After months of negotiations and a nearly six-week strike, Ford Motor Co. reached a tentative agreement with the United Auto Workers, the union representing roughly 57,000 Ford workers nationwide.

In Kentucky, about 9,000 Ford UAW workers were on strike outside of the company's iconic Kentucky Truck Plant where the Super Duty truck is assembled for two weeks before a tentative agreement was reached on Oct. 25. Todd Dunn, president of UAW Local 862, which represents 12,000 Ford workers at KTP, and the Louisville Assembly Plant, said the contract is estimated to be a $9 billion agreement over the course of its four-year national lifespan.

Kentuckians stand to reap the benefits of this new contract which promises $1.95 billion in product investments to KTP and LAP, the second largest contractual commitment in the agreement.

But Ford's reach in Kentucky doesn't stop there. The famed automaker has committed to producing an "all new EV [electric vehicle] product" at LAP, its joint venture battery park in Glendale, BlueOval SK, is on track for the first of the two plants to start production in 2025, and according to Dunn and Gov. Andy Beshear, the economic reach of Ford touches at least another 100,000 jobs across the state.

In other words, Ford is good for Kentucky's economy.

"It's really important we retain Ford," said Thomas Lambert, an assistant professor of economics and equine industry at the University of Louisville.

Lambert said Ford generates roughly $33.19 billion in economic output in Kentucky. This large sum is reflective of total generated revenues from Ford and the auto company's vendors and suppliers. Lambert also found that the government collects "$1.3 billion in local, state, and federal taxes due to Ford’s operations in Jefferson County."

"Those tax breaks [Ford] gets are paid for in the long term ... the tax benefits, specifically with these manufactures, almost always outweigh the cost," Lambert said. "This state has always tried to work closely with Ford ... because you can still pick up other vendor and supplier businesses ... as long as these two plants are healthy and keep going."

Kentucky, home to the largest concentration of hourly Ford employees in the U.S. outside of Michigan, is set to emerge not only as a leader for the Ford brand but to take the lead in the production of EVs and batteries domestically. Ford did not respond to the Courier Journal's attempt for comment about its investments in Kentucky.

"Kentucky is the new Michigan," Dunn said.

Will Kentucky become the 'center of the Ford universe?'

Early in his first term as Kentucky's governor, Beshear strategized with UAW officials including Dunn and executive leadership at Ford, Executive Chair Bill Ford Jr. and Ford CEO Jim Farley, to increase the automaker's footprint in the Commonwealth.

The results from this were the investment by Ford to build its joint venture BlueOval SK Battery Park in Glendale, a more than $5 billion investment that will create 5,000 jobs once both of the twin battery plants open, and a $700 million investment in KTP.

"Ford is fully committed to Kentucky, they believe in us and we deliver," Beshear said.

Farley agrees, noting that the workforce in Kentucky can be relied on to elevate the Ford brand and create products consumers desire.

"I think in the end, it's kind of a partnership between Ford [and] the state, but it really only works because of the hard work of the people in the plant," Farley said in May about what has kept Ford committed to Kentucky.

Beshear, who is "proud to be a pro-union governor" believes that in part, his communication with both Farley and International UAW President Shawn Fain has positioned not only the company, but the UAW to want to be here.

"When you as a governor can have a good relationship both with the leadership of the UAW and leadership of Ford, it puts us in the best position to succeed," Beshear said. "I'm really proud of what we have done with Ford, really grateful for both Ford and the UAW about really creating that better future for our families."

With the backing of a household name brand like Ford continuing to support and prop up the state economy, Beshear is confident it will continue to expand the manufacturing economy across Kentucky.

"There is no question between BlueOval SK, the investment that's already been made at the truck plant and now at LAP, we are a center of the Ford universe, if not the center," Beshear said.

Could more Ford jobs come to Kentucky by 2028?

Most likely.

At the very least, Ford is still committed to opening the first battery plant at the BlueOval SK Battery Park in 2025, with the second plant's production delayed to a yet-to-be-determined date. The twin battery plants are anticipated to hire 5,000 workers, and some workers have already been hired.

During negotiations, the union worked tirelessly to try and include battery and EV operations, like the BlueOval SK Battery Park in Glendale, under the National Master Agreement. Despite union efforts, Ford sources had continually said this would not be possible due to the plant being a joint venture with a South Korean company.

Nonetheless, the UAW and Ford did negotiate some language that provides job security during the EV transition, giving employees "rights to accept work at newly planned LLC Establishments in Kentucky and Tennessee under the provisions of the Master Agreement."

But for the time being, the 5,000 workers who will be hired in Glendale will remain non-union.

"We're still going to have to organize it [BlueOval SK Battery Park in Glendale, Kentucky] but we got some transitional stuff ... sounds like we got our foot in the door which is what I thought we'd end up to," Dunn said.

What's next for KTP and LAP?

KPT, which has seen continued product demand, will begin producing a hybrid electric vehicle of both the Ford Expedition and Lincoln Navigator, as part of the negotiated $750 million product commitment.

Currently, that plant is not outfitted to produce hybrid vehicles, Dunn said. The plant will need to undergo renovations either in layout or machinery to be able to produce hybrids, and Dunn speculates this new production of the hybrids alongside the gas engines could lead to more jobs at KTP.

According to the UAW and Ford tentative agreement highlights posted Oct. 29 by the UAW, LAP will receive a $1.2 billion investment over the life of the four-year agreement and see the end of production of both the Ford Escape and Lincoln Corsair after 2025 and will transition to producing an "all-new EV product" starting in 2026. LAP is one of three assembly plants with a committed future EV product in the tentative agreement.

"We got a plant that's got security, we got a United States that's got the security of having a product, ... we've significantly increased the wages, we've got a contract that's the best contract we've seen in two decades," Dunn said.

However, Dunn worries the workforce may be reduced, noting that the transition to producing fully electric vehicles, "brings challenges, eliminated jobs, but adds other opportunities." Most recently, a Ford Labor Relations Bulletin from Nov. 3 announced LAP would experience temporary layoffs throughout the remainder of the month "due to parts related issues."

"We're going into something that we've never done before, so there is no right answer, but it's basically ... the ability to have other opportunities within electrification," Dunn said. "So, we've got more opportunities that they're working on to be able to navigate our membership if affected [by workforce reduction]."

What happens during the contract ratification?

Now that a tentative agreement has been reached, UAW locals that represent Ford workers across the country have started the ratification process. To become the governing contract between Ford and the UAW, members must pass the contract by a majority vote in a democratic election process.

Eleven of the 54 locals nationwide had already voted as of Nov. 6, showing favor for the contract with 70.9% voting to pass but the ratification vote is expected to run through mid-November.

Local 862 in Louisville will vote on the contract on Nov. 12 at the Galt House Hotel in downtown Louisville.

"We told Ford to pony up and they did," International UAW President Shawn Fain previously said. "But the decision isn’t up to us. Every UAW member at Ford will get a vote on this deal, and the majority rules."

Contact business reporter Olivia Evans at oevans@courier-journal.com or on Twitter at @oliviamevans_.

This article originally appeared on Louisville Courier Journal: Ford, UAW contract agreement could help with growth of Kentucky plants