In the sixth week of the American auto workers' strike, Ford became the first of Detroit's three major automakers to reach a temporary agreement, which also led to further negotiations between General Motors, Stellantis, and the United Auto Workers (UAW).
On October 25th local time, UAW reached a temporary labor agreement with Ford Motor, announcing an immediate 11% salary increase for workers. The content of the agreement still needs to be approved by union members, including a 25% increase in wages over the next four and a half years of the contract period, an increase in retirement benefits, and the cancellation of low wage levels for workers.
In addition to the widespread wage increase, the lowest paid temporary workers will also receive a salary increase of over 150% over the next four and a half years of contract, and UAW has won the right to strike against factory closures.
UAW stated that the new agreement will increase the total wages of workers by over 33%, breaking a historical record.
UAW Vice Chairman Chuck Browning stated that the value of the new agreement is higher every year than the entire agreement reached in 2019. The salary increase that members of the Ford Motor Workers' Union will receive in the next four and a half years will exceed the sum of our past 22 years
Previously, industry views believed that the preliminary agreement between Ford and UAW would provide a reference template for UAW's negotiations with General Motors and Stellantis. The latest information indicates that General Motors and Stellantis have taken action.
Reuters quoted sources as saying that UAW held a negotiation meeting with General Motors and Stellantis on October 26th local time in the United States, and both parties are working hard to reach an agreement. Sources believe that an agreement may be reached as early as later that day.
For Ford, the huge losses caused by the strike forced it to quickly end negotiations and begin resuming normal production activities.
It is understood that this strike resulted in Ford losing $1.3 billion in revenue. Ford CFO John Lawler stated that the impact of the strike on Ford's third-quarter profits is approximately $100 million, and in the coming weeks, Ford will face a lot of uncertainty, making it very complex to restart work at the three currently idle factories.
Ford stated that the new agreement with UAW will increase the cost of producing each car by $850 to $900 and reduce Ford's profit margin by 0.6 to 0.7%.
Subsequently, when announcing its third quarter financial report, Ford stated that due to the pending approval of a temporary agreement with the United Auto Workers (UAW), it had withdrawn its 2023 full year performance guidance.
According to the financial report, Ford's revenue in the third quarter was $4.38 billion, a year-on-year increase of 11%, with a net profit of $1.2 billion and a loss of $827 million in the same period last year. The earnings per share was $0.39, lower than the market expectation of $0.45.
After Ford's Q2 results were announced earlier, based on a better than expected performance in the first half of the year - a 16% year-on-year increase in total revenue and a net profit of $3.7 billion (a loss of $2.4 billion in the same period last year), Ford raised its 2023 profit forecast to $11 billion and $12 billion, higher than the previous $9 billion to $11 billion.
In terms of electrification transformation, Ford has announced that it will delay some of its multi billion dollar investment plans for new electric vehicles and battery production capacity. It is understood that the 36000 electric vehicles delivered by Ford in the third quarter are expected to lose $36000 per vehicle.
Ford executives stated that Ford will continue to make profits. Given that the electric vehicle market is growing but growing slowly, Ford is striving to find a balance between price, profit, and demand for electric vehicles. However, electric vehicle prices are currently facing significant downward pressure.
In addition, Ford workers who are on strike are gradually returning to their jobs under UAW requirements and approval, which also means that various models that Ford previously stopped production may restart production this week.
In the view of Detroit automakers, UAW's requirements will significantly increase labor costs and hinder the electrification transformation of these giants, and will be at a disadvantage compared to non unionized foreign car companies such as Tesla and Toyota.