A six-week United Auto Workers strike at Ford Motor Co. F-N cut sales by about 100,000 vehicles and cost the company US$1.7-billion in lost profits this year, the automaker said Thursday.
Additional labour costs from the four-year and eight-month agreement will total US$8.8-billion by the end of the contract, translating to about US$900 a vehicle by 2028, chief financial officer John Lawler said in a company release. Ford will work to offset that cost through higher productivity and reducing expenses, Mr. Lawler said.
The Dearborn, Mich.-based automaker reissued full-year earnings guidance that was withdrawn during the strike, but it trimmed its expectations. The company now expects to earn US$10-billion to US$10.5-billion before taxes in 2023. That’s down from the US$11-billion to US$12-billion that it projected last summer.
Ford said the strike caused it to lose production of high-profit trucks and SUVs. UAW workers shut down the company’s largest and most profitable factory in Louisville, Ky., which makes big SUVs and heavy-duty pickup trucks.
The company generated US$4.9-billion in net income and US$9.4-billion in pretax earnings during the first nine months of the year.
The announcement was issued prior to Mr. Lawler speaking to the Barclays Global Automotive and Mobility Technology Conference Thursday morning in New York.
Mr. Lawler said the company is committed to its strategy of disciplined capital allocation to generate strong growth and profitability.
Shares of Ford rose 1.1 per cent to US$10.71 in trading before Thursday’s opening bell, then declined to close the day at US$10.26, down 3.1 per cent. They are down more than 20 per cent in the past year.
Ford plans to release fourth-quarter and full-year financial results on Feb. 6.
Ford, as well as rivals General Motors and Stellantis, agreed to new contracts with the UAW that raise top assembly-plant worker pay by about 33 per cent by the time the deals expire in April of 2028. The new contracts also ended some lower tiers of wages, gave raises to temporary workers and shortened the time it takes for full-time workers to reach the top of the pay scale.
At the end of the contract, top-scale assembly workers will make about US$42 an hour, plus they’ll get annual profit-sharing cheques.
UAW president Shawn Fain said during the strike that labour costs make up only 4 per cent to 5 per cent of a vehicle’s costs, and that the companies were making billions and could afford to pay workers more.