This was shaping up to be a good year for workers at the GM Orion Assembly plant in a working-class suburb of Detroit. After receiving a pay raise in the wake of last year's United Auto Workers strike, they were scheduled to begin production later this year on a marquee GM product: the Chevy Silverado electric pickup truck.
But like thousands of other workers on the front lines of the transition to electric vehicles, they've hit some bumps in the road. GM told nearly 1,000 workers at the Orion plant in December that they would be laid off until late 2025 to make engineering improvements and amid demand for electric vehicles. Their last pay was their holiday pay for Christmas week, and many are still waiting to find out whether they will be offered a job at another factory.
“It was a very depressing moment here last month,” said an employee at the plant who requested anonymity because he is not permitted by GM to speak to the media. “We thought we were finally getting a little respite. We were supposed to be out of business for a year at most to retool, and now GM is reconsidering the electric vehicle market. I don't think the economy is hurting, I think the auto industry is hurting.” “In my opinion, they put the cart before the horse.”
While electric vehicle sales have continued to increase, demand has slowed from a rapid pace in 2022 and 2021, leading automakers, including industry leader Tesla, to expect sales to slow this year. This has prompted US automakers to back away from some of their lofty electric vehicle ambitions into which they have poured billions of dollars in recent years, leaving thousands of workers with their jobs at risk.
“Ultimately, all of this stems from demand, and demand is not as high as all these CEOs think it is,” said Gabe Dowd, senior sustainable energy analyst at TD Cowen. “So a lot of the initial goals that GM or Ford put forward “Two years ago they might have proven to be a bit optimistic and perhaps too aggressive. “I think everyone was expecting the entire car fleet to change overnight and become electric, but that is clearly impossible and impractical.”
Along with GM, Ford said in January it would reduce production of its F-150 Lightning electric pickup truck amid slowing demand, cutting 1,400 workers from the production line in Dearborn, Michigan, starting in April. The majority of those employees will be reassigned to a different role at the same complex, transferred to other plants that make gas-powered vehicles, or offered early retirement, Ford said.
Hundreds of workers have also been laid off at electric vehicle battery plants in recent months in Michigan, Georgia and California. North Carolina-based Albemarle, which supplies lithium to battery makers, said in January that it would cut an unspecified number of jobs due to changing market conditions.
Ford said last fall that it would delay about $12 billion in previously announced spending on electric vehicles, delaying construction of one of its two battery plants in Kentucky and scaling back plans for a battery plant in Michigan that will now employ 1,700 workers, down from a planned 2,500. .
Demand for electric vehicles has continued to grow, with a record 317,000 electric vehicles sold in the fourth quarter of 2023, up 40% from the previous year, according to Cox Automotive. But the pace of this growth has slowed since 2021 and 2022, when the industry was growing between 70% and 80% year-on-year. Over the past three years, companies have poured billions into electric vehicle investments, driven by incentives pushed by the Biden administration.
Analysts attributed the slowdown in demand largely to the relatively high price of electric vehicles, especially with rising interest rates on auto loans, and consumer concerns about the lack of charging infrastructure.
“I think what you're seeing is a change in how quickly people want to buy electric cars right now because they're expensive and there's concern about charging infrastructure,” said Alan Amici, chief executive of the Center for Automotive Research. “If you're an efficient automaker, you're trying to match your production with demand. It's not beneficial for anyone to fill a yard with electric vehicles that don't sell.
Analysts said the industry faces more uncertainty with the upcoming US presidential election, as electric vehicle incentives introduced under the Biden administration could be rolled back or halted under the second Trump administration.
The layoffs came after autoworkers won last fall when they received a more than 25% pay raise and other benefits after a strike that lasted more than a month. The new contract also provides additional benefits to protect laid-off workers, such as allowing them to move more easily to factories that make electric vehicle batteries, and includes incentives for early retirement if automakers have to reduce their workforces, said Art Wheaton, director of labor studies. At Cornell University.
“In the collective bargaining agreement they had just negotiated, the UAW had first and foremost in mind job security,” Wheaton said.
At the Orion plant, workers had expected to be laid off for much of 2024 as the plant switched production from the Chevy Bolt to the new electric Silverado, but many were surprised when GM announced in December that those layoffs would be extended an additional year, a plant worker said.
“It's very devastating, not only to our workforce, but to the entire community there,” the factory worker said. “Things were growing, things were looking good and people were happy. We only had support from the town, and all this money was coming from the state, and then they did it.”
The plant, which has had its ups and downs since it was built in the 1980s, was the center of much hype just two years ago. At a news conference, Michigan Gov. Gretchen Whitmer and GM officials announced the company's plan to spend $4 billion to expand and renovate the facility to manufacture the Silverado electric truck as part of a broader $7 billion investment in the state that GM said will support 5,000 people. Careers.
In exchange for GM's investment, the state of Michigan awarded the company hundreds of millions of dollars in grants, funds for infrastructure and facility development, and state and local tax breaks.
GM plans to be able to offer jobs to all laid-off employees at other Michigan plants, about half of whom have already been hired or are in the process of being hired for new jobs, GM spokesman Kevin Kelly said.
The plant worker said the commute could put a strain on some workers, including those who already travel more than an hour to get to the Orion plant and others who may not be able to manage a longer trip with family or child care obligations.
For UAW workers who are not reassigned to another plant, GM will provide compensation in addition to state unemployment for up to two years, which is up to 84% of their normal pay along with their health care coverage, Kelly said.
These benefits will not apply to non-GM workers at the plant not covered by a UAW contract with GM, such as those working in maintenance, sanitation and security jobs.
Despite the layoffs and production delays, local officials still expect the planned investment in the plant to be a boon to a working-class community that still clings to its motto — “living a vacation” — from its days in the 19th century. -A tourist destination of the century.
Many suppliers that will make components for the EV Silverado, such as seats and bed liner, have continued to plan to build new facilities nearby despite production delays, Orion Township Supervisor Chris Barnett said, and the project has also helped attract other businesses, such as hotels and shopping centers. . Restaurants.
While Barnett said he was disappointed to hear that production had been postponed, he was not surprised given the amount of construction work that would have to be done in a relatively short time to meet the planned 2024 rollout of the EV Silverado. He added that work on the factory was continuing and that he had recently been there for a meeting.
“Although no one is excited about the delay, I have no feeling that this project will be abandoned or shelved,” Barnett said. “When this news came out, we were all like, ‘This makes sense.’ There was no one saying, ‘The sky is falling.’ There was no panic.”
In Hardin County, Kentucky, officials face a similar situation. Ford was expected to open two battery factories there, one in 2025 and the other in 2026, which will employ 5,000 workers. But in October, the company said it had postponed the opening of the second factory due to slowing demand for electric vehicles.
However, local officials expect a huge boost to the economy from just one plant, which will create at least 2,500 jobs and transform a largely rural community about an hour from Louisville, Hardin County Judge/Executive Keith Toole said.
“He completely changed everything in the area with these two huge buildings,” Towle said. “I've been in the automotive business for 30 years, and I've traveled the world, so I've seen some big projects. But this has to be one of the biggest I've ever seen.
Many suppliers are already moving to the area to be closer to the factory, and developers have been looking for land for housing development with the expectation that thousands of workers will eventually be moved to the area, Towle said. The delay in construction of the second station will help give the community more time to prepare for the influx of workers the county expects.
“There are going to be bumps in the road for anything new like this,” Towell said. “I think most people understand that Ford and its partner are not going to produce a million batteries that won't be sold. They have to meet the demand that's out there.”
