This year, Ford lost $1.7 billion in earnings and saw sales drop by 100,000 cars due to a six-week United Auto Workers (UAW) strike, the carmaker said on Thursday, November 30.
According to a business announcement by Chief Financial Officer John Lawler, additional labor expenditures from the four-year and eight-month arrangement would amount to $8.8 billion by the conclusion of the contract. This translates to around $900 per car by 2028. Lawler added that Ford would try to reduce costs and increase efficiency to make up for the expenditure, AP News reported.
Ford Motor Company' logo is seen on the side of the building at the unveiling of their new electric F-150 Lightning outside of their headquarters in Dearborn, Michigan on May 19, 2021.
The Financial Report
After withdrawing the full-year profits forecast during the strike, Ford re-issued it, but this time with lower expectations. In 2023, the company's revised pretax profit target is $10 billion to $10.5 billion. Last summer, it predicted $11 billion to $12 billion, so this is a decrease from that.
Producing lucrative trucks and SUVs was halted, said Ford, because of the strike. Massive SUVs and heavy-duty pickup trucks are made in the company's biggest-profit plant in Louisville, Kentucky, which UAW members shut down.
Net income for the first nine months was $4.9 billion, while pretax profits were $9.4 billion.
This news comes just before Lawler takes the stage at Thursday morning's Barclays Global Automotive and Mobility Technology Conference in New York, according to AP News.
Assembly factories and other facilities at Ford, General Motors, and Stellantis were the targets of the UAW strike that started on September 15. At Ford, the strike came to its conclusion on October 25.
In Lawler's speech, he said the firm would continue to follow its plan of disciplined capital allocation in order to achieve high growth and profitability.
Before the market opened on Thursday, Ford shares increased 1.1% to $10.71. Compared to a year ago, they are down almost 20%.
Ford is scheduled to announce its financial results for the fourth quarter and the full year on February 6, 2024.
See Also: UAW Launches New Drive Targeting 13 Carmakers, Including Tesla, Toyota After Winning New Contracts
New Deal With UAW
New contracts with the UAW, which would enhance top assembly plant worker compensation by around 33% by the time the terms expire in April 2028, were agreed upon by Ford, GM, and Stellantis. A few lower salary levels were eliminated, temporary workers were given wage increases, and the time it would take for full-time workers to reach the top of the pay scale was reduced as a result of the new agreements.
When the contract is up, top-tier assembly workers will earn about $42 an hour plus profit-sharing payments once a year.
Labor expenditures account for just 4% to 5% of a vehicle's total cost, according to UAW President Shawn Fain. He made another comment during the strike that firms could afford to pay their workers more since they were earning billions.
See Also: GM's Quarterly Profits Suffered From Recent Strikes; Possible Losses Loom if Picketing Persists
