Ford UAW Update: We Don't Expect a Complete Offset of Higher Labor Costs

Ford CFO John Lawler spoke at a Nov. 30 conference and gave some detail on the company’s recently ratified UAW contract that expires in spring 2028. Further details are in our Oct. 26 note. Lawler said the strike cost Ford $1.7 billion in 2023 EBIT, with $1.6 billion of that in the fourth quarter. Wholesale volume will be about 100,000 units lower than planned. Ford announced it is resuming 2023 guidance with total company adjusted EBIT of $10 billion to $10.5 billion and automotive adjusted free cash flow of $5 billion to $5.5 billion—the latter is roughly half of what GM guided on Nov. 29. In July, Ford guided EBIT to be $11 billion to $12 billion and cash flow of $6.5 billion to $7 billion. Deducting $1.7 billion from the old guidance’s $11.5 billion midpoint is $9.8 billion but Ford’s new guidance midpoint is $10.25 billion, so its outlook excluding the strike has improved.