Ford Motor Co. announced on Thursday that labor costs following a recent major union deal will cost the company around $900 per vehicle by 2028.
Ford, along with other major U.S. automakers General Motors and Stellantis, faced a six-week-long strike by the United Auto Workers (UAW) starting in September, with all three companies recently voting to approve new contracts through 2028. The company expects the new labor agreement to cost an extra $8.8 billion over the course of the contract due to wage increases of around 25%, accelerated wage progression and cost-of-living adjustments as stipulated in the contract, according to a press release from the company. (RELATED: Biden Regulator Launches Investigation Into Automakers Over Fire Risk For Six Million Vehicles)
“This industry is going through the biggest technology-led transformation we’ve ever seen and some companies, new and old, are going to be left behind,” Ford CFO John Lawler said in a statement in the announcement. “Ford+ is the right strategy to win — we’ve got a highly talented team that allocates capital with great discipline, so that we’re executing with consistency, generating strong growth and profitability, and are less cyclical.”
Ford changed its full-year 2023 adjusted earnings projection up from $10 billion to $10.5 billion after adjusting down following the UAW strike, according to the announcement. The company now estimates it lost $1.7 billion in profits due to the strike, with a majority of that being felt in the fourth quarter.
It’s time.
From Toyota to Tesla, from California to South Carolina, America’s autoworkers are ready to Stand Up and win their fair share of the auto industry’s record profits.
Join us.https://t.co/AcFJW3wqhW pic.twitter.com/5HMOB0YN3j
— UAW (@UAW) November 29, 2023
Directly following the end of the strike in October, the Big Three automakers announced that they collectively lost over $5 billion in revenue as a result of the labor dispute. Stellantis reported the largest loss out of the three, at $3.2 billion, while GM reported the lowest at $800 million.
Part of the company’s new Ford+ strategy includes investment in the production of electric vehicles in an attempt to get ahead of the emerging market, according to the announcement. Ford has previously reported having struggled to offload electric vehicles (EVs), resorting to slashing prices by as much as $10,000 per vehicle, and has also cut its production target for EVs.
Ford and the UAW did not immediately respond to a request to comment from the Daily Caller News Foundation.
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