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Ford lost $1.3bn in operating earnings due to the United Auto Workers’ strike of nearly six weeks, the company said on Thursday, a day after striking a deal with the union.
The company made 80,000 fewer cars and trucks than it otherwise would have churned out during the days workers were on strike, said Ford chief financial officer John Lawler.
The lost earnings at the vehicle maker eclipse the damage at Detroit rival General Motors, which said on Tuesday the strike had cost it $800mn in earnings before interest and taxes. GM put the weekly cost at $200mn in operating earnings, while Ford priced the impact at $400mn. Stellantis, the group behind the Jeep and Chrysler brands, has not yet said how much the strike is setting it back.
“The important for thing for us was to get an agreement and get back to work and get the factories running again,” Lawler said.
Ford and the UAW reached a tentative deal on Wednesday that would give autoworkers a 25 per cent raise over four years. The union also persuaded the company to restore cost-of-living adjustments, a key goal at the outset of negotiations, and shorten the time it takes for workers to reach the top of the wage scale.
The wage increases in the new contract exceed the 23 per cent the UAW negotiated with the carmakers between 2001 and 2022, the union noted.
The UAW has targeted individual factories and parts depots to maximise pressure at each of the three carmakers and preserve the union’s strike fund. UAW members walked out of Ford’s largest, most profitable plant on October 11, nearly two weeks before the union took industrial action at plants of similar importance at GM and Stellantis.
The tentative contract will not take effect unless the UAW’s members at Ford vote to ratify it.
Lawler declined to say how much the new contract would cost the company in total, but he said it would increase labour costs by $850-$900 per vehicle and decrease margins by 60 to 70 basis points.
“The company will be profitable moving forward,” Lawler said. “There’s no doubt about that . . . Yes, this is an increase in costs for us. This is something we’re going to have to work on.
“When you’re in a period of inflation, you have to pay your people, because it puts a hardship on them,” he added. “Then you as a company have to find a way to operate more efficiently.”
Ford withdrew its full-year guidance on Thursday. Earlier this year it had forecast an adjusted $11bn to $12bn in earnings before interest and taxes for 2023. GM also pulled its forecast this week.
Ford reported net income of $1.2bn in the third quarter, up from a loss of $827mn for the same period last year. Just $100mn of the strike impact fell in the third quarter, Lawler said.
It earned an adjusted 39 cents per share, compared to the 46 cents that Wall Street had expected. The miss was due both to the strike and to 50,000 vehicles that were held at the factory because of quality problems, Lawler said.
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