SUNDAY EDITION | Ford’s Louisville plants reach highest employment in at least two decades
Beneath turmoil at the top of the company, Ford’s two plants in Louisville are humming along at what appears to be record employment.
LOUISVILLE, Ky. (WDRB) -- Ford Motor Co.’s stock price has been sliding since 2014, and the market now puts a higher value on electric car-maker Tesla than the iconic Detroit company that pioneered assembly line production.
Amid a downturn in sales this year, Ford replaced its CEO in May.
But beneath that turmoil, Ford’s two plants in Louisville are humming along at what appears to be record employment, churning out more truck and SUVs as consumers continue to move toward bigger vehicles.
Some 13,500 hourly workers are on the line building Escape SUVs and Super Duty pickups between the Louisville Assembly Plant, on Fern Valley Road, and the Kentucky Truck Plant, on Chamberlain Lane, according to UAW Local 862, which represents Ford’s rank-and-file employees.
That’s the most workers at the two factories in at least 17 years, according to reports the union is required to file annually with the federal government showing active members at year’s end.
Todd Dunn, president of UAW Local 862, said Louisville Assembly Plant (LAP) and Kentucky Truck Plant (KTP) collectively employee the most people in their respective 62- and 48-year histories.
While WDRB was not able to independently confirm those claims, a pamphlet written in 1988 to commemorate Ford’s 75th anniversary in Louisville said the plants’ employment had peaked at 10,130 in 1978. A Ford spokeswoman did not respond to multiple inquiries for this story.
The turnaround is remarkable considering that a decade ago, neither plant’s future was secure, and Ford nearly closed LAP – built in 1955 – for good.
In 2008, when the global credit and financial crisis set in and employment at the two plants dwindled to less than 6,000, Ford decided to spend $600 million to overhaul LAP to transition from the Explorer SUV to the smaller, more fuel-efficient Escape.
Later, the company would add large SUVs – the Lincoln Navigator and Ford Expedition – to KTP, followed by major upgrades beginning in 2015 to convert the Super Duty pickups, Expedition and Navigator to lighter, aluminum bodies.
All told, Ford now pegs its total post-2007 investment in the two plants – some completed and some still in the works -- at $2.4 billion.
“We have consistently put more and more and more into each plant. Right now, our goal is try and figure out how many cars we can build. It’s not worrying about layoffs or a downturn,” Dunn said.
Helped by changing consumer preferences and the sustained drop in gas prices that began in 2014, the Escape, Super Duty trucks and large SUVs have been some of Ford’s best-selling and most profitable vehicles in recent years.
Ford’s sales are down 4.3 percent so far in 2017 – part of an industry-wide contraction. But sales of the Escape are up 2 percent. F-Series (which also includes the F-150 not built in Louisville) trucks are up 8.3 percent.
“The best job security for workers is to be working at a plant that has fresh, compelling products that consumers want to buy, and that is the case with the plants in Louisville,” said Michelle Krebs, an industry analyst with Autotrader.com.
For the last several years, consumers have been migrating from small and mid-sized cars to cross-overs, SUVs and trucks, Krebs said.
“The big story has been since the recession has been this major shift by consumers preferring sport utility vehicles over traditional cars, and the Escape is the perfect example,” she said.
While gas prices are a contributing factor, Krebs said demographic changes are the primary cause. Baby Boomers find it easier to get in and out of higher-sitting SUVs and millennials with expanding families prefer more room.
Last year, Ford sold 60 percent more Escape SUVs than in 2010, the year the Escape began rolling off the line in Louisville. That compares to a 35 percent rise in the automaker’s total sales over the same period.
The F-Series line, which houses the Super Duty trucks, was up 55 percent during the period.
Boom comes at cost to taxpayers
In 2007, as Ford was publicly weighing closing more than a dozen plants, the future looked particularly bleak for LAP as Explorer sales plummeted, according to news stories from the time.
The state legislature, under then Gov. Ernie Fletcher, dangled $200 million in public incentives front of Ford to upgrade Louisville Assembly Plant. The effort required passing a new, ultra-generous program whereby the state would pay just to retain jobs at auto manufacturers, instead of adding new jobs.
“It gave us the tools to be able to negotiate with them about their future,” Fletcher’s successor, former Gov. Steve Beshear, said in an interview last week. “Being able to work with them on an investment to upgrade their facility – as opposed to tying it to new job creation – was a key at that time resulting in us keeping Ford.”
As Ford’s investment into the Louisville plants has expanded to $2.4 billion, the amount of incentives the company can claim from Kentucky has also ballooned to $315 million.
Just how much the company has invested and how much of the public money it has received are not matters of public record, but the state disclosed in February 2016 that Ford had received $182 million at that point. It has until 2021 to claim the rest.
Beshear and others see the result – with Ford’s more than doubling its employment – as vindication that the incentives were “worth every penny.”
State Rep. Joni Jenkins, a Democrat from Shively, told The Courier-Journal in 2007 that she reluctantly supported the mega-deal for Ford.
“Looking back now it was a really good decision,” she said last week.
But Jason Bailey of the Kentucky Center for Economic Policy, which advocates for progressive policies, said other factors likely played a role in Ford’s resurgence, including cyclical patterns in the auto industry and the Obama-era bailout of Ford’s competitors General Motors and Chrysler, which kept many of Ford’s supplier plants afloat.
“The economic recovery—and an extended period where people didn’t buy cars leading to them begin having to replace them—is the main factor in (Ford’s) rising success in recent years,” Bailey said in an email. “To say that state tax breaks caused (Ford’s surge in employment) is a vast overstatement, to say the least. State tax breaks are often a windfall for decisions companies make anyway.”
Jobs pay less than decade ago, gap closing
Another factor was the UAW’s reluctant agreement in 2007 to allow Ford to hire new workers at about $15 an hour, roughly half the $28 an hour that veteran production workers earn.
The latest contract, approved in 2015, seeks to close the “two tier” gap in pay, but over a long period. New hires start at $17 and are supposed to progress to the veteran wage of $28 within eight years.
“We made a lot of sacrifices,” Dunn said. “Everything that we did got us to the point of where we are at today.”
One worker who doesn’t mind the pay differential is Joe Williams, 51, who got hired a year and a half ago as a forklift driver at KTP. He now makes $18.25 an hour.
“Five years ago, I would have never seen myself doing this, but I am so glad this was the path I was put on,” said Williams, a former disc jockey and part-time construction worker, who relishes having Ford’s generous health insurance.
“Will I get to $30 an hour? No, but if I can get to $20 … I think I am doing all right.”