A six-week United Auto Workers strike at Ford minimize gross sales by about 100,000 automobiles and value the corporate $1.7 billion in misplaced earnings this 12 months, the automaker mentioned Thursday.
Further labor prices from the four-year and eight-month settlement will complete $8.8 billion by the top of the contract, translating to about $900 per car by 2028, Chief Monetary Officer John Lawler mentioned in an organization release. Ford will work to offset that price by way of greater productiveness and lowering bills, Lawler mentioned.
The Dearborn, Michigan, automaker re-issued full-year earnings steering that was withdrawn throughout the strike, however it trimmed its expectations. The corporate now expects to earn $10 billion to $10.5 billion earlier than taxes in 2023. That’s down from $11 billion to $12 billion that it projected final summer season.
Ford mentioned the strike brought about it to lose manufacturing of high-profit vans and SUVs. UAW staff shut down the corporate’s largest and most profitable factory in Louisville, Kentucky, which makes huge SUVs and heavy-duty pickup vans.
The UAW strike started Sept. 15, concentrating on meeting crops and different amenities at Ford, General Motors and Jeep maker Stellantis. The strike ended at Ford on Oct. 25.
Shares of Ford fell virtually 3% to $10.29 in noon buying and selling Thursday. They’re down greater than 25% up to now 12 months.
Ford, in addition to GM and Stellantis, agreed to new contracts with the UAW that elevate prime meeting plant employee pay by about 33% by the point the offers expire in April of 2028. The brand new contracts additionally ended some decrease tiers of wages, gave raises to short-term staff and shortened the time it takes for full-time staff to get to the highest of the pay scale.
On the finish of the contract, top-scale meeting staff will make about $42 per hour, plus they’ll get annual profit-sharing checks.
UAW President Shawn Fain said during the strike that labor prices are solely 4% to five% of a car’s prices, and that the businesses have been making billions and will afford to pay staff extra.
On the Barclays International Automotive and Mobility Expertise Convention Thursday in New York, Lawler was requested about whether or not Ford would think about one thing like GM’s $10 billion inventory buyback program, which the corporate introduced Wednesday.
Lawler mentioned Ford plans to return 40% to 50% of its free money stream to shareholders, on prime of the present 15-cent per-share dividend. He mentioned the corporate has religion that executing its plans will improve the inventory value.
He additionally mentioned Ford expects costs to fall subsequent 12 months by about $1,800 for inner combustion automobiles. About $800 of that will come from vendor earnings, whereas Ford would supply $1,000 in reductions, he mentioned.
The corporate, he mentioned, has to concentrate on affordability points for customers, who now spend a median of $45,332 on automobiles, in line with J.D. Energy.
Earlier than the coronavirus pandemic in 2019, individuals spent about 13.5% of month-to-month disposable earnings on automobiles, Lawler mentioned, however that elevated to fifteen.7% in 2022. It’s since dropped to 14.5%, and Ford expects it to return to pre-pandemic ranges subsequent 12 months, Lawler mentioned.
Electrical car costs, he mentioned, have already got fallen sooner than Ford or different automakers anticipated, so he doesn’t see a lot of a decline subsequent 12 months. However as individuals who aren’t early adopters begin shopping for EVs, the costs will come down, he mentioned. “They are not willing to pay a premium” over fuel powered automobiles, he mentioned.
He foresees EV costs being equal to fuel automobiles and mentioned the corporate is working to scale back EV prices so revenue margins equal fuel automobiles by 2026 or 2027.
In October Ford introduced it will delay $12 billion worth of EV capital spending as the expansion fee for EVs began to gradual. Lawler mentioned Ford isn’t altering its EV technique, however is altering ways “so that we can better match (manufacturing) capacity with demand.”
The corporate has cut in half the scale of a Michigan battery factory, delayed a battery plant in Kentucky and minimize manufacturing capability for electrical motors and different parts. “It’s not about not moving forward on our electric plans. It’s about the level of capacity that we’re putting in place.”
