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Ford Is Investing $1 Billion in Plants Making Its High-Profit SUV

Ford Motor is investing $1 billion in two Chicago factories and hiring 500 workers to expand its ability to crank out SUVs.

Ford Is Investing $1 Billion in Plants Making Its High-Profit SUV
Attendees walk in the Ford Motor Co. display area at the Auto Shanghai 2017 vehicle show in Shanghai, China. (Photographer: Qilai Shen/Bloomberg)

(Bloomberg) -- Ford Motor Co. is investing $1 billion in two Chicago factories and hiring 500 workers to expand its ability to crank out high-profit sport utility vehicles, including the new Explorer.

Chicago Mayor Rahm Emanuel and Joe Hinrichs, Ford’s president of global operations, made the announcement Thursday at the Chicago Auto Show. The investment in the assembly and stamping plants fulfills an obligation the company made in its 2015 contract with the United Auto Workers. Ford is set to bargain a new pact with the union later this year.

Ford Is Investing $1 Billion in Plants Making Its High-Profit SUV

Ford is killing off its slow-selling sedans in the U.S. and betting big on the SUVs and trucks that generate most of its profit. Other American manufacturers also are closing plants and cutting shifts at auto factories as consumers -- driven by cheap gas and a love of the large -- are shunning traditional cars. Ford Chief Executive Officer Jim Hackett is trying to capitalize on this trend as he engineers an $11 billion overhaul.

“We’re playing to our strengths.” Kumar Galhotra, head of Ford’s North American operations, told reporters in Detroit last week. “That means we’re allocating our capital differently. Ninety percent of our capital is now going into trucks and utilities.”

Ford’s 95-year-old Chicago assembly plant and 63-year-old stamping plant -- which also will build the Lincoln Aviator and Police Interceptor Utility -- are being updated with advanced manufacturing technology. The company’s investment also includes training at the factories that employ 5,800 workers.

Ford is spending $40 million to upgrade lighting and add security at the plants, where some employees have experienced sexual and racial harassment. In August 2017, the company agreed to pay as much as $10.1 million to settle claims following an investigation by the Equal Employment Opportunity Commission. The Dearborn, Michigan-based company faced similar charges at the factories that led to a $17.5 million settlement in 1999.

Ford also will improve bathrooms and cafeterias and add new break areas at the aged facilities.

“We are watching it very carefully,” Ford’s Hinrichs said of employees’ behavior at the plants. “We don’t tolerate any kind of harassment of any kind. We are making significant investments in this plant to upgrade it to have an even better place to work.”

Ford Is Investing $1 Billion in Plants Making Its High-Profit SUV

Hackett wrote an open letter apologizing to employees in December 2017 after the New York Times published a report about the long history of sexual and racial complaints at the two factories.

“There is absolutely no room for harassment at Ford Motor Company,” Hackett wrote, adding for perpetrators: “We don’t want you here, and we will move you out for engaging in any behavior like this.”

To contact the reporters on this story: Keith Naughton in Southfield, Michigan at knaughton3@bloomberg.net;Kim Chipman in Chicago at kchipman@bloomberg.net

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Melinda Grenier

©2019 Bloomberg L.P.