The United Auto Workers union’s weeks-long strike against Ford Motor Company cost the automaker $1.7 billion, and the additional costs of the new contract reached to end the work stoppages will cost more than five times that amount, according to the automaker.
Ford, which withdrew its full-year outlook for 2023 in October as the UAW strike shut down some key production facilities, issued a new, scaled-back forecast on Thursday.
The automaker now expects adjusted earnings before interest and taxes (EBIT) of $10 billion to $10.5 billion in 2023, down from the $11 billion to $12 billion guidance it offered in July.
The company said that $1.6 billion of the total strike-related lost profit occurred in the fourth quarter and that the shutdowns resulted in approximately 100,000 fewer wholesale vehicles sold than originally planned.
The new contract, which includes a 30% pay rise for unionised autoworkers over the four-and-a-half year term, will cost Ford $8.8 billion over the life of the agreement.
CFO John Lawler confirmed an earlier estimate that the additional labour costs will add about $900 per vehicle by 2028, and said the company will work to offset those costs by boosting productivity and cutting costs elsewhere.
Ford’s outlook comes a day after General Motors said its new labour agreements with the UAW and Canadian union Unifor will cost it $9.3 billion by 2028. GM also announced $10 billion in share buybacks and a 33% dividend increase in a bid to boost its sagging share price.
