In a statement released on Thursday, Ford Motor reinstated its 2023 guidance after withdrawing its forecast the previous month due to labor strikes and negotiations with the United Auto Workers union. According to this guidance, the company expects between $10 billion and $10.5 billion in adjusted earnings before interest and taxes (EBIT) and adjusted free cash flow of $5 billion to $5.5 billion. This is compared to the previously announced guidance of adjusted EBIT between $11 billion and $12 billion and adjusted free cash flow of $6.5 billion to $7 billion.
Ford stated that the new UAW labor agreement is projected to cost $8.8 billion over the life of the contract, which expires in April 2028. General Motors also recently announced a $9.3 billion impact from its labor agreement with the UAW. Before these strikes, Ford had appeared likely to meet its guidance, according to Chief Financial Officer John Lawler. Lawler also noted that the UAW strike had already cost Ford $1.3 billion in earnings due to lost production, including $100 million during the third quarter. The impact amount was updated to $1.7 billion, including $1.6 billion in the fourth quarter.
The UAW deal is expected to add approximately $900 in costs per assembled vehicle 2028. As a response, Ford plans to cancel or postpone $12 billion in investments related to electric vehicles. Chief Financial Officer Lawler is expected to discuss the company’s reinstated guidance at an investor conference hosted Barclays.
The recent moves Ford and General Motors reflect a broader trend in the U.S. auto industry, as evidenced the second of the so-called “Big Three” U.S. automakers, Stellantis, which also reached a labor agreement with the UAW. However, Stellantis has not disclosed the expected costs of its labor pact with the union.