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Amid concerns about auto jobs, DOE spends $15.5 billion to retrofit existing auto plants for EVs

Updated: Sep 7

two kids march in UAW t shirts holding small American flags
Image Credit: United Auto Workers // Labor Day 2017
  • Less than a week after the United Auto Workers authorized a strike against the “Big Three” automakers — General Motors, Ford Motor Co, and Stellantis, the parent company of Jeep and Chrysler — the Biden Administration announced $15.5 billion in loans and grants to retool existing auto plants for EVs, rehire autoworkers, and advance battery production.

  • The Department of Energy funding fills in gaps where it left off last time. When the DOE loaned Ford a historic $9.2 billion in June, it notably did not include any provisions for workers’ wages and job security.

  • This time around, the money is aiming to ensure “no worker, no community left behind,” U.S. Secretary of Energy Jennifer M. Granholm said, noting the announcement will have an impact on the United Auto Workers (UAW) negotiations.

  • There are 83 new or expanded clean energy manufacturing facilities, but over the last 20 years, automakers have closed or spun out 65 plants, letting go of thousands of employees. However, ​​“We are glad to see the Biden Administration doing its part to reject the false choice between a good job and a green job,” Shawn Fain, president of the UAW said in a statement.

Since it passed a year ago, the historical Inflation Reduction Act, aka the “climate bill” has spurred 83 new or expanded clean energy manufacturing facilities in the United States, and close to 30,000 new clean energy manufacturing jobs, according to a count from trade group American Clean Power.

However, amid the IRA’s headlining achievements, many workers in existing fossil fuel-dependent industries have worried about the security of their jobs, especially workers in the auto industry.

Right now, United Auto Workers (UAW), the nation’s largest auto union, may go on strike against one or all of the Big Three automakers: General Motors, Ford Motor Co, and Stellantis, the parent company of Jeep and Chrysler. The union voted overwhelmingly in favor, authorizing the strike just last week.

The race to electrify the economy has been on the up and up, with automakers like GM, Hyundai, Toyota, and Ford announcing new EV plants across various states, from Kentucky to Tennessee to North Carolina, thanks to domestic-only funding from the IRA. However, according to Shawn Fain, president of the UAW, these have come at the expense of 65 plants in the last 20 years.

Workers want three things: wage increases, reinstating cost-of-living adjustments, and shifting back to pension plans these companies cite the transition to electric vehicles as the reason they’ve cut thousands of jobs in recent years. Ford, for example, pointed to the electric restructure as why in 2021 it initiated layoffs, laying off 3,000 more this month, with more anticipated to ripple across the industry.

“The automakers have not yet promised job security in our ongoing negotiations,” Fain said in a statement. The Big Three have until September 14 to reach an agreement with the workers.

That’s why less than a week after the union voted to authorize a strike, and just in time for Labor Day, the Biden administration announced $15.5 billion worth of funding and loans to not only retool existing auto plants to manufacture EVs, but to rehire existing autoworkers.

“President Biden is investing in the workforce and factories that made our country a global manufacturing powerhouse,” U.S. Secretary of Energy Jennifer M. Granholm said in a statement. “Today’s announcements show that President Biden understands that building the cars of the future also necessitates helping the communities challenged by the transition away from the internal combustion engine.”

a sign reads: What you drive drives America! UAW 551 Chicago, IL"
Photo Credit: United Auto Workers / Labor Day 2017

“While we transition to EVs, we want to ensure that workers can transition in place, that there is no worker, no community left behind,” she added for reporters on a Thursday call.

The DOE’s funding package includes $2 billion in Inflation Reduction Act grants for domestic manufacturers to continue and expand production of both hybrid and electric vehicles up to $10 billion in loans to support automotive manufacturing conversion projects to help retain automotive jobs in communities that may have otherwise lost them.

In addition to the retrofitting funding, the announcement also invests approximately $3.5 billion to boost the production of advanced batteries and battery materials that are critical to rapidly growing clean energy industries of the future, including electric vehicles and energy storage.

Like other funding opportunities, the goal of this money is to not only advance domestic production but also secure jobs in places that were once automotive hubs, while aligning with the diversity and equity goals set by Biden’s Justice40 Initiative that pledges that 40% of all clean energy funding focuses on environmental justice communities.

“We are going to focus on financing projects that are in long-standing automaking communities, that keep folks already working on the payroll, projects that advance collective bargaining agreements, that create high-paying, long-lasting jobs,” Granholm said.

Earlier this year, Shawn Fain critiqued the DOE’s record-breaking $9.2 billion “no strings attached” loan to Ford.

The goal of the funding was to put some gas, or rather battery electricity, into Ford’s EV manufacturing, but according to the UAW, it was given “with no consideration for wages, working conditions, union rights or retirement security.”

“We have been absolutely clear that the switch to electric engine jobs, battery production and other EV manufacturing cannot become a race to the bottom. Not only is the federal government not using its power to turn the tide – they’re actively funding the race to the bottom with billions in public money,” Fain said in a statement in June.

“The last time the federal government gave the Big Three billions of dollars, the companies did the exact same thing: slash wages, cut jobs, and undermine the industry that for generations created the best jobs for working families in this country,” he added, pointing to the federal government’s bid to save the industry during the crash in 2009.

However, this time around Fain and the UAW is singing a different tune, albeit a cautious one.

In an August statement on the DOE’s most recent clean automotive funding announcement, Fain said, “This new policy makes clear to employers that the EV transition must include strong union partnerships with the high pay and safety standards that generations of UAW members have fought for and won.”

​​“We are glad to see the Biden Administration doing its part to reject the false choice between a good job and a green job.”

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