Dive Brief:
- Ford Motor Co. estimates the United Auto Workers strike cost the automaker $1.3 billion, erasing $1.2 billion in third-quarter net income. It also canceled the production of 80,000 vehicles, the company said when it reported Q3 earnings Thursday.
- The strike cost Ford $850-900 per vehicle in Q3, reducing the company's earnings before taxes and interest by $100 million, CFO John Lawler said during Ford’s earnings call. That lowered the company’s margins six- to seven-tenths of a percentage point but allowed Ford to turn a profit in Q3, he said.
- Ford, however, lost nearly all its Q3 profits at the beginning of Q4 after the UAW strike expanded to its highly profitable truck plant in Louisville, Kentucky, stopping production of the Ford F-Series Super Duty, Ford Expedition and Lincoln Navigator, and impacting other facilities.
Dive Insight:
Ford withdrew its full-year guidance as a result of recent developments in the UAW strike. The company’s fortunes could soon change after Ford reached a tentative agreement with the UAW on Wednesday. The deal, which still needs approval from about 57,000 UAW-represented employees, includes the highest base wage increases (25%) that Ford workers received in more than two decades.
“The UAW strike created significant uncertainty regarding our full-year results, and even though we have reached a tentative agreement and our employees are starting to return to work, we have withdrawn our guidance for the year,” Lawler said.
Ford is focusing on rebooting its plants and moving on from the strike, CEO Jim Farley said during the company’s earnings call.
“Right now, we're focused on restarting three important assembly plants, calling back more than 20,000 Ford employees to work, supporting our suppliers as they restart and shipping lots of Super Duties, Explorers, and Broncos to our customers,” Farley said.
Ford reported $44 billion in Q3 revenue, an 11% year-over-year increase. Adjusted EBIT in Q3 was $2.2 billion, up from $1.8 billion a year ago. In addition, the automaker’s adjusted free cash flow in Q3 fell from $3.6 billion to $1.2 billion, a $2.4 billion year-over-year decline, as the company invested in EVs and growing its commercial unit Ford Pro.
The automaker’s operating margin in Q3 2023 increased slightly to 5%, a 0.4% year-over-year increase.
Ford plans to report its Q4 and full-year 2023 financial results on Feb. 1.
