Ford 'pausing' construction of Marshall EV battery plant
Ford Motor Co. on Monday halted construction of a $3.5 billion electric vehicle battery plant project in the Marshall area amid months of battles with local residents, Republicans in Congress over its planned use of Chinese technology and an auto industry strike in its second week.
"We're pausing work, and we're going to limit spending on construction at Marshall until we're confident about our ability to competitively run the plant," Ford spokesman T.R. Reid told The Detroit News on Monday. A "number of considerations" were at play in the company's business decision, he said, but wouldn't say whether the United Auto Workers' ongoing strike of Ford and its crosstown rivals was a factor.
“We haven’t made a final decision about the investment there," Reid said of the Marshall site. The pause in construction is effective Monday.
The decision was announced on the eve of President Joe Biden traveling to Michigan on Tuesday to rally striking UAW workers, who have walked off the job at Ford's Michigan Assembly Plant in Wayne. On Wednesday, former President Donald Trump is planning a town hall-style event in Macomb County to appeal to auto workers whose jobs he contends are at stake in the transition to EVs.
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The Ford battery plant in Marshall was one of four cornerstone projects around which state lawmakers and Gov. Gretchen Whitmer in 2021 built the state's newest job-creating incentive program, the Strategic Outreach and Attraction Reserve (SOAR) fund. The taxpayer incentive program was created after Michigan lost out on a massive $11.4 billion investment Ford and a battery partner made in EVs and batteries at two different sites in Tennessee and Kentucky.
Whitmer's office, in a statement Monday, said the governor is committed to keeping Michigan a "home to world-class automakers whose iconic vehicles are built by the best auto workers in the world."
"Ford has been clear that this is a pause, and we hope negotiations between the Big 3 and UAW will be successful so that Michiganders can get back to work doing what they do best," said Bobby Leddy, a spokesman for Whitmer.
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The 2.5-million-square-foot battery park was to be run by a wholly-owned subsidiary of Ford called “Blue Oval Battery Park Michigan.” The plant would employ 2,500 people with pay ranging from $20 to $50 an hour.
UAW President Shawn Fain called Ford's move Monday "a shameful, barely veiled threat" by the automaker to cut jobs before they were created.
“We are simply asking for a just transition to electric vehicles, and Ford is instead doubling down on their race to the bottom,” he said in a statement.
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On Monday, House Republican Leader Matt Hall criticized the pause in construction. The Kalamazoo County Republican, who previously represented the Marshall area in Calhoun County, advocated for the creation of the SOAR program but later voted against money for the Ford project, arguing the state could have gotten a better deal.
“After failing to land other high-profile Ford deals, Gov. Whitmer gave away the store to bring Ford to Marshall," Hall said in a statement. "But with Democrats pushing policies that make Michigan less competitive, the $1.7 billion in subsidies and tax incentives still fell short."
For the Marshall plant, Ford planned to license battery technology from China-based Contemporary Amperex Technology Co. Ltd., or CATL — the world's leading LFP battery maker — but CATL would not receive state tax incentives, Ford officials told lawmakers.
The project was met with some pushback from the community, which opposed the behind-the-scenes negotiations that landed the deal, questioned the use of agricultural land for the project and expressed concerns about Ford’s relationship with CATL to obtain the battery technology to be produced at the factory. Marshall area residents have been unsuccessful, to date, in derailing the project in the courts.
Some Republican congressional leaders had sharply criticized the project and asked Ford CEO Jim Farley in July for copies of the licensing agreement and communications between Ford and CATL, as well as communications between Ford and the Biden administration. Ford's competitors Tesla Inc. and Honda Motor Co. import CATL's lithium iron phosphate batteries from China.
One Michigan Republican congressman cheered Ford's decision to halt the Marshall project, claiming that the use of CATL's technology would help China's communist regime.
"While I support Ford’s decision to put the Marshall project on hold, President Biden should end his tailpipe policies and give American automakers and their employees the freedom to innovate and create the auto technologies of the future," said U.S. Rep. John Moolenaar, R-Caledonia. "Right now, Biden’s current policies force American auto companies to be more dependent on the Chinese Communist Party and the electric vehicle materials that China has a stranglehold on."
The deal
The Dearborn-based automaker announced on Feb. 13 that it planned to invest about $3.5 billion in an electric vehicle battery plant park in Marshall. As part of the deal, Ford secured about $210 million in direct tax incentives plus a 15-year property tax abatement worth about $775 million over the life of the tax break.
There was also roughly $750 million set aside for site prep at the location, with a $299 million earmark allocated for the Marshall Area Economic Development Alliance and a $330 million earmark pushed toward the Michigan Department of Transportation budget for expanding roadways and freeway connections for the presumed Ford plant's truck traffic. Another $120 million was routed to MAEDA earlier this month through the SOAR fund.
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The Marshall Area Economic Development Alliance assumed responsibility for site preparation of the large tract of farmland west of Marshall for the battery manufacturing park.
State officials have stressed that Marshall's site prep there — paid for with roughly $420 million in taxpayer money allocated to the group since the start of the year — is separate from Ford's construction of the EV battery plant.
MEDC CEO Quentin Messer said in February that the site prep work would have needed to be completed for any development, but Ford's plans for the location accelerated the work.
In a statement Monday, the state economic development agency said it was "staying the course" to make the Marshall site a "global leader in mobility and highly advanced manufacturing."
The Michigan Economic Development Corporation on Monday said site prep would continue in Marshall.
The money the Marshall Area Economic Development Alliance received was supposed to be largely independent of the Ford project. Detroit-based construction giant Walbridge had a $178 million contract with MAEDA to build out infrastructure for the site to make it ready for constructing a battery factory.
Jim Durian, CEO of the Marshall economic development agency, said Monday he was aware of Ford's pause in work and remained confident in the "enormous potential of the project."
"We hope current negotiations between Ford and the UAW conclude in a mutually beneficial manner, and we remain confident this project will continue as planned once these negotiations are complete," Durian said in a statement.
Terms of the agreement
When the Michigan Strategic Fund board gave final approvals to the $210 million in incentives for Ford, they did so based on a “terms sheet” that would govern how and when Ford received disbursements of the taxpayer subsidies.
It’s not clear whether those terms remained unchanged in the final contract the state signed with Ford or whether Ford has met any of the benchmarks triggering disbursal of the incentive money. The MEDC did not answer questions Monday about the terms of disbursement to Ford or how much in incentive money had already been paid to the automaker.
The terms sheet approved by the Michigan Strategic Fund board set an overall deadline for completion by March 31, 2027, while also setting out a number of milestones Ford would have to meet within that time span in order to begin receiving the incentives. The earliest benchmark was slated for June 30.
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Ford anticipated receiving a “pad-ready site” from the Marshall Area Economic Development Alliance by June 30 of this year, triggering the disbursement of up to $105 million, or half of the incentive money, on a reimbursement basis, according to the term sheet.
Under the same terms, Ford anticipated having additional area ready for construction by Oct. 2 — a week from today — for the project, triggering the release of the second half of the money on a reimbursement basis.
If Ford fails to meet its investment or jobs commitments, it will be forced to pay a portion of the incentive money back to the state within 90 days of receiving a clawback notification, under the terms sheet.
Under the terms, some clawback triggers come into play if Ford fails to meet the March 31, 2027, deadline for completion, fails to secure the promised jobs, moves part of the project out of state or abandons “eligible expense activities” at the site for more than 120 days.
eleblanc@detroitnews.com