Ford Motor said November 30 that a new labor deal with the United Auto Workers (UAW) union could cost the company roughly $8.8 billion.
According to Reuters, Ford predicts the new deal with the UAW would add $900 in labor costs to each vehicle the company produces by 2028. The organization said it is working to offset those potential costs by making cuts elsewhere.
Ford and GM were forced to slash their full-year profit forecasts due to lost production caused by the UAW strikes at U.S. plants in September and October.
Ford now expects its adjusted earnings before interest and taxes (EBIT) for 2023 to be between $10 billion and $10.5 billion. The company estimated its adjusted EBIT for 2023 would be between $11 billion and $12 billion in July. The forecast includes $1.7 billion in lost profits from the strike.
The company added that it had to slash its future EV investment plans by $12 billion due to weakened consumer demand.
Citi analyst Itay Michaeli wrote that the new guidance “looks encouraging.”
Ford’s shares were up 1.4% before stock market trading began November 30.
The UAW announced October 31 that it had reached a tentative deal with GM that would have given union members a 30% overall increase in wages over the life of the contract, which is set to expire in April 2028. The union also reached tentative deals with Ford October 26 and Stellantis October 30.
