(New York) The impact of the strike launched in mid-September at Ford is estimated at $1.3 billion, its financial director told the press on Thursday, who welcomed the “agreement in principle” reached the day before with the union, because it will allow the factories to reopen.
The American automobile manufacturer is targeted, like its competitors Stellantis and General Motors, by a social movement which mobilizes nearly 45,000 of their 146,000 employees registered with the United Auto Workers (UAW) union.
Ford is the first of the three to seal an agreement with the union, but it must still be ratified by the members, a condition generally necessary to lift a strike call.
But the UAW announced Wednesday that Ford workers would return to their jobs immediately, to put pressure on GM and Stellantis.
“This is the best (deal) for Ford, because it will allow our factories to restart,” John Lawler, chief financial officer, told reporters on Thursday.
The group “is focused on restarting three assembly plants” and returning some 20,000 employees to sites, said Jim Farley, boss of the group, during a conference with analysts.
Lawler said the impact was estimated at $100 million on third-quarter operating profit and $1.3 billion overall, and “about 80,000 vehicles” were not manufactured.
This shortfall will be perceptible in the fourth quarter turnover.
“We are facing an incredible amount of work and uncertainty,” he noted, saying the restart was “going to be complex” particularly because many employees have found work elsewhere.
Without giving details of the content of the agreement in principle, Mr. Lawler said it would increase the manufacturing cost from $850 to $900 per vehicle.
As a result, the group will have to increase “efficiency and productivity” to “compensate for higher labor costs”.
“We believe that the agreement will be ratified, but we consider that the concessions made by the group are high and that they will weigh on margins,” commented Garrett Nelson, analyst at CFRA Research, in a note, emphasizing that they “will affect its competitiveness against Tesla and other non-union manufacturers.”
Ford reported lower-than-expected third-quarter results on Thursday with revenue of $43.8 billion (up 11%) and net profit of $1.2 billion (loss of $827 million a year earlier).
Reported per share and excluding exceptional items – a benchmark for the markets – the profit came to 39 cents when the consensus was forecasting 46 cents.
Faced with uncertainties, the group canceled its forecasts for the entire financial year.
In electronic trading after the New York Stock Exchange closed, Ford shares lost 4.31%.