UAW president slams Biden administration for loan to Ford-SK battery plants

United Auto Workers President Shawn Fain on Friday blasted the historic, $9.2 billion Department of Energy loan to Ford Motor Co. and South Korean battery maker SK On Co. as an example of the federal government "actively funding the race to the bottom with billions in public money."

"These companies are extremely profitable and will continue to make money hand over fist whether they're selling combustion engines or EVs. Yet the workers get a smaller and smaller piece of the pie," Fain said in a statement. "Why is Joe Biden's administration facilitating this corporate greed with taxpayer money?"

The strongly-worded statement was the latest example of the UAW's new, more militant leadership being willing to publicly criticize Democratic leadership that historically has had friendly ties with the Detroit union — an unanticipated rebuke of the president's re-election campaign.

In May, Fain said in a letter first reported by The Detroit News that the union would withhold endorsing Biden in the 2024 election until the administration supported a "just transition" to EVs with "top wages" for workers.

More:UAW demands Biden support 'top wages' for EV workers before endorsing

Fain's newest statement came in response to news Thursday that the Department of Energy planned to make the largest single loan in its history to the Ford-SK On joint venture to help finance three electric-vehicle battery plant projects the companies are building in Kentucky and Tennessee. The loan would cover the majority of the $11.4 billion the companies are investing in the projects that also include an EV assembly plant.

“The UAW is working toward the same goal as the President, which is to ensure the future of the auto industry is made here in America, with good-paying, union jobs," Robyn Patterson, a spokesperson for the White House, said in a statement. "America’s auto workers are essential to achieving that goal. The President respects the UAW for working hard for the interests of the working people they represent, and the President will keep working hard toward that goal as well, including blocking attempts by Republicans in Congress to send these historic private sector investments and jobs overseas.”

The loan marks the most significant direct government support for an auto company since the bailouts of General Motors Corp. and Chrysler Corp. during the Great Recession. It is just the latest example of the Biden administration's push to ramp up domestic production of EVs, batteries and other critical components and materials in a bid to compete with China.

Ford and SK On have estimated that the projects will create 11,000 jobs. DOE said Thursday the plants will generate more than 120 gigawatt hours of U.S. battery production annually.

"The goal is twofold: One is to get people to choose the United States over other countries they may have put this infrastructure in originally, and two is to get them to move faster because the terms alone make it possible to take bolder action," Jigar Shah, director of the Loan Programs Office at the Department of Energy, told The News on Thursday. "I think both of those things were true in this case."

The LPO received an additional $40 billion in loan authority from the Inflation Reduction Act; Shah estimated his office has $50 billion in loan authority.

Last year, the LPO gave Ultium Cells LLC — a joint venture between General Motors and LG Energy Solutions — a $2.5 billion loan for their battery production efforts. In 2009, Ford got a $5.9 billion loan through the same program, which it has since repaid.

DOE would not disclose the details of the loan terms, but the agency can offer loans with a repayment timeline of up to 25 years. The interest rate on the loan is equal to the United States Treasury yield curve with zero credit spread — a more affordable rate than the joint venture could have received from private investors.

Feds announce historic $9.2 billion loan for Ford-SK battery joint venture in South

In a statement Thursday, Ford Treasurer Dave Webb said: "Major technology transitions have always been accelerated by collaboration between the public and private sectors. The DOE’s foresight here will help do the same for the transition to zero-emissions transportation."

The Kentucky and Tennessee manufacturing campuses are key pieces of Ford's $50 billion electrification strategy, under which it plans to hit a production rate of 2 million EVs annually by the end of 2026. The company also is targeting 10% companywide earnings margins by that time, and 8% earnings margins in an EV business that is slated to lose billions of dollars this year.

The DOE loan announcement comes just ahead of the start of crucial contract negotiations between the Detroit automaker and the UAW. Unionizing joint venture and battery plants, especially in the South where unions historically have struggled to organize workers, is a top priority for the union.

"The Department of Energy’s loan to BlueOval SK will help create thousands of good-paying jobs and strengthen the future of American manufacturing," Ford spokesperson Melissa Miller said in a statement that noted the battery plants are slated to create 7,500 jobs. "Ford expects that BlueOval SK will pay competitive wages and benefits to attract and retain the workforce needed to build high-tech batteries. Employees at BlueOval SK’s battery plants will be able to choose whether they organize, a right that Ford fully respects and supports."

Even though the UAW successfully organized the first Ultium Cells plant in Warren, Ohio, a top concern for the union is securing wages and benefits that are on par with those of automakers at legacy manufacturing plants. The UAW is currently bargaining a contract with the JV for the Ultium Cells workers in northeast Ohio.

“In the past five years, workers who build GM products in Lordstown, Ohio, have had their lives turned upside down as they were forced to retire, quit or uproot their families and move all over the United States when GM closed their plants despite massive profits," Fain said Friday. "Their jobs were replaced in GM’s new joint-venture battery facility with jobs that pay half of what workers made at the previous Lordstown plant. Not only is the White House refusing to right this wrong, they’re giving Ford $9.2 billion to create the same low-road jobs in Kentucky and Tennessee.”

He added: "It's an absolute shame to see another Democratic administration doubling down on a taxpayer-funded corporate giveaway."

jgrzelewski@detroitnews.com

rbeggin@detroitnews.com