Ford lost $1.7B in profits due to UAW strike, company estimates

Ford is estimating that the company lost $1.7 billion in profits this year due to the six-week long strike by United Auto Workers (UAW).

Ford Chief Financial Officer John Lawler said in a company press release that there were $1.7 billion in strike-related lost profits, including $1.6 billion in just the fourth quarter. Lawler said this was due to “to interruptions in production of high-margin trucks and SUVs,” which resulted in sales dropping to about 100,000 units lower than what the company anticipated.

Overall, Ford predicted that its full-year adjusted earnings before interest of taxes will be between $10 billion and $10.5 billion. It noted that before the full effects of the strike were felt, Ford generated $9.4 billion in adjusted earnings before interest and taxes during the first three quarters of the year.

Ford and the UAW ratified an agreement earlier this month after workers went on strike for six weeks. The four-year deal includes a 25 percent wage increase over the course of the contract, with 11 percent coming in the first year. Cost of living increases further boost the pay raises to 33 percent, according to the union.

“The members have spoken. After years of cutbacks, months of our Stand Up campaign, and weeks on the picket line, we have turned the tide for the American autoworker,” UAW President Shawn Fain said in the wake of the ratification in a statement.

Ford said the deal will ultimately cost $8.8 billion over the course of the contract due to gross wages, accelerated wage progression and cost of living adjustments. Ford said that it will cost the company about $900 per vehicle by 2028, adding that it will offset the costs through lower expenses and higher productivity.

Ford’s estimates come a day after General Motors released its own estimated losses due to the UAW strike. General Motors said that the strike cost the company $1.1 billion in a release on Wednesday.