Ford’s Contract With UAW To Cost $8.8 Billion, Be Around $900 Per Vehicle By 2028

Ford’s Contract With UAW To Cost $8.8 Billion, Be Around $900 Per Vehicle By 2028

If you’ve ever wondered what $8.8 (£7.0 / €8.1) billion could buy, you now have an answer and it’s a contract with the UAW.

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Ford announced the eye-popping number earlier today as they revealed their post-strike outlook for this year’s operating results. It’s not a pretty picture as the automaker expects to miss out on $1.7 (£1.3 / €1.6) billion in lost profits due to the labor dispute.

The loss is due to “interruptions in production of high-margin trucks and SUVs” as the UAW strike shuttered Chicago Assembly, Michigan Assembly, and the Kentucky Truck Plant. These facilities build the Aviator, Bronco, Explorer, Expedition, and Navigator SUVs as well as the Ranger and F-Series Super Duty pickups.

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More: GM Takes $9.3 Billion Hit From New Union Contracts, Embarks On Share Buyback Program

 Ford’s Contract With UAW To Cost $8.8 Billion, Be Around $900 Per Vehicle By 2028

While the UAW struck in stages, Ford estimates the action resulted in around 100,000 ‘lost’ vehicles. Given this, the company now expects full-year adjusted earnings, before interest and taxes, of $10.0 (£7.9 / €9.2) billion to $10.5 (£8.3 / €9.6) billion.

The $8.8 (£7.0 / €8.1) billion cost is over the life of the UAW contract and “gross wages, accelerated wage progression, and cost of living adjustments” make up the largest parts of that figure. Ford expects this to equate to around $900 (£713 / €827) per vehicle by 2028.

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Ford CFO John Lawler said the cost represents around “60 to 70 basis points of adjusted EBIT margin,” which the automaker will “work to offset through higher productivity and lower expenses.” The company added they have “absolute confidence in, and commitment to, the long-term potential of its Ford+ plan to generate growth and value.”

Besides the relatively dry financial news, Lawler said Ford made the right call on backing off highly automated vehicles to focus on L2+ and L3 systems. After seeing the mess at Cruise, it’s hard not to agree.

The CFO also mentioned “new” versions of the Explorer, Expedition, and Navigator. Lawler didn’t mention timing, but the UAW contract recently confirmed plans for hybrid versions of the full-size SUVs.

Baldauf for CarScoops

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