The United Auto Workers union's weekslong strike against Ford Motor Company cost the automaker $1.7 billion, and the added costs from the new contract reached to end the work stoppages will cost more than five times that amount, according to the automaker.
Ford, which pulled its full year 2023 outlook in October as the UAW's strike held some major production facilities at a standstill, unveiled a new trimmed-down forecast on Thursday.
The automaker now expects adjusted earnings before interest and taxes (EBIT) of $10 billion to $10.5 billion for 2023, down from its prior forecast of $11 billion to $12 billion offered in July.
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The company said $1.6 billion of the total strike-related lost profits were incurred during the fourth quarter, and the shutdowns resulted in a reduction of roughly 100,000 fewer wholesale vehicles being sold than originally planned.
The new labor agreement, which includes a 30% wage increase for union autoworkers over the four-and-a-half-year contract, will cost Ford $8.8 billion over the life of the contract.
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CFO John Lawler confirmed a previous estimate that the added labor expenses will add about $900 in costs per vehicle by 2028, and says the company will work to offset those costs by boosting productivity and lowering expenses elsewhere.
Ford's outlook comes a day after General Motors said its new labor deals with the UAW and Canadian union Unifor will cost it $9.3 billion through 2028. GM also announced $10 billion in share buybacks and a 33% dividend increase to boost its sagging share price.
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Ford was the first of Detroit's Big Three automakers to reach a tentative deal with the UAW after nearly six weeks of targeted strikes that saw thousands of workers stage a walkout and join picket lines across the country, demanding better wages and benefits.
Reuters contributed to this report.
