Ford Expects Higher Per-Car Costs than GM from UAW Deals
Ford Motor Co. executives said Nov. 30 that the recently concluded United Auto Workers contract negotiations are expected to add about $900 in costs per vehicle by 2028—a starkly higher figure than the $575 per car over the life of the contract offered by General Motors Corp. earlier this week.
Speaking on Bloomberg Radio, CFO John Lawler said the new, four-and-a-half-year UAW contracts will add about $500 to each car Ford produces in 2024 before steadily climbing as workers’ wages do. He added that he’s not yet sure why GM’s total impact number is markedly lower.
In a statement and separately while speaking at a conference hosted by Barclays, Lawler said Ford lost $1.7 billion in profits from the six-week UAW strike, during which the union targeted factories making high-margin trucks and sport-utility vehicles. Workers’ new contracts will cost Ford $8.8 billion over their lives, which is slightly less than GM’s $9.3 billion forecast.
Earlier UAW negotiations coverage:
- GM Executives Detail UAW Deals’ $575-per-Car Costs
- The UAW’s Strike Win on Plant Closures Is Too Rigid
- Expect More UAW Strikes, and Be Prepared
- UAW Members Ratify Contracts with GM, Ford, and Stellantis
- What’s Next for the UAW? 5 Takeaways from Labor Experts
- Ford, Stellantis, General Motors Plant Investments Promised to Win UAW Contracts
- UAW 'Squeezes Every Last Dime' Out of GM in Strike Talks
- GM, Stellantis Reach Tentative UAW Deals
- UAW, Ford Announce Tentative Agreement, Ending Strike for 20,000
- CFO: GM Will Need to ‘Look at Efficiencies Across the Board’ After New UAW Deal
- UAW Launches 2nd Surprise Strike, This Time at Dodge Ram Plant
- UAW Takes Swing with Surprise Strike at Kentucky Truck Plant
- UAW Strike Update—A New Strike at Mack Trucks, But No New Detroit 3 Sites
- UAW President Announces New Strike Targets
- UAW Workers Want Work-Life Balance. It's Exactly What the Industry Needs
- The UAW Strike Is a Test Case for Biden-omics
- UAW Expands Strike to 38 GM, Stellantis Parts Distribution Centers
- The ‘Unprecedented’ UAW Strike Was Very Predictable
- UAW Strike Update—Ford, GM Lay Off Workers
- Opinion: UAW Punches Well Above the Belt in its Stand Up Strike
- UAW Strike All But Certain
- What’s the Deal with the UAW Contract Talks? Labor Negotiations Explained
- UAW Votes to Authorize Strikes Against Big Three
Like their peers at GM, Lawler and Ford CEO Jim Farley have been reining in spending on electric vehicles of late: A month ago, they said they will push out $12 billion worth of investments in auto and battery plants. And they, too, are pushing to simplify design and manufacturing processes to help absorb the higher labor costs they knew would be coming their way.
“Now it’s our job to go off and drive productivity and efficiencies,” Lawler said. “And we need to do that by reducing the number of hours it takes to build a vehicle, simplifying designs and reducing complexity as well as driving increased efficiencies through our factories.”
One factor from the UAW negotiations that Lawler said will help in those efforts: Ford now has more flexibility to, in consultation with the union, rebalance production lines in its U.S plants.
One of the bright spots in Ford’s business, Lawler told Barclays analyst Dan Levy: The order books for its Ford Pro suite of commercial vehicles are “beyond our production capacity today” and that division—which posted a Q3 EBIT margin of 12% and has produced $5.4 billion in operating profits year to date—looks set to have a very strong 2024.
“The IRA, the CHIPS Act, et cetera, [are] driving a tremendous amount of demand,” Lawler said. “Commercial customers have been underserved for a number of years.”
Shares of Ford (Ticker: F) fell about 3% to $10.26 Nov. 30—another notable discrepancy to investors’ reaction to GM’s similar news earlier this week, which included word of a dividend hike and $10 billion share buyback plan. Over the past six months, Ford shares have lost about 20% of their value, trimming the company’s market capitalization to about $41 billion.
About the Author
Geert De Lombaerde
Senior Editor
A native of Belgium, Geert De Lombaerde has been in business journalism since the mid-1990s and writes about public companies, markets and economic trends for Endeavor Business Media publications, focusing on IndustryWeek, FleetOwner, Oil & Gas Journal, T&D World and Healthcare Innovation. He also curates the twice-monthly Market Moves Strategy newsletter that showcases Endeavor stories on strategy, leadership and investment and contributes to other Market Moves newsletters.
With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati in 1997, initially covering retail and the courts before shifting to banking, insurance and investing. He later was managing editor and editor of the Nashville Business Journal before being named editor of the Nashville Post in early 2008. He led a team that helped grow the Post's online traffic more than fivefold before joining Endeavor in September 2021.