A six-week United Auto Workers strike at Ford cut sales by about 100,000 vehicles and cost the company $1.7 billion in lost profits this year, the automaker said Thursday.
Additional labor costs from the four-year and eight-month agreement will total $8.8 billion by the end of the contract, translating to about $900 per 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, Lawler said.
The Dearborn, Michigan, automaker re-issued full-year earnings guidance that was withdrawn during the strike, but it trimmed its expectations. The company now expects to earn $10 billion to $10.5 billion before taxes in 2023. That's down from $11 billion to $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, Kentucky, which makes big SUVs and heavy-duty pickup trucks.
The company generated $4.9 billion in net income and $9.4 billion in pretax earnings during the first nine months of the year.
The announcement comes ahead of Lawler speaking to the Barclays Global Automotive and Mobility Technology Conference Thursday morning in New York.
The UAW strike began Sept. 15, targeting assembly plants and other facilities at Ford, General Motors and Jeep maker Stellantis. The strike ended at Ford on Oct. 25.
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% to $10.71 in trading before Thursday’s opening bell. They are down more than 20% 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 Jeep maker Stellantis, agreed to new contracts with the UAW that raise top assembly plant worker pay by about 33% 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 get to the top of the pay scale.
At the end of the contract top-scale assembly workers will make about $42 per hour, plus they’ll get annual profit-sharing checks.
UAW President Shawn Fain said during the strike that labor costs are only 4% to 5% of a vehicle’s costs, and that the companies were making billions and could afford to pay workers more.