Ford Motor Co. has reinstated its 2023 guidance and stated that the recently ratified United Auto Workers contract will cost the company $8.8 billion. This cost will be passed down to customers.
In a business update on Thursday, the automaker revealed that the contract will cost $8.8 billion by the time it expires in 2028. The six-week strike, which began in mid-September, has already cost the company $1.7 billion.
Ford expects to raise the price of each vehicle by $900 next year in order to cover the costs of the strike and the contract.
In its update, Ford also adjusted its earnings before interest and taxes from the original guidance of $12 billion down to $10 billion. The company also announced an adjusted free cash flow of $5.5 billion.
As the auto industry adapts to the UAW’s contracts, Ford expects the contract to cost the company $9.1 billion, with vehicle prices set to rise next year.
Chrysler and Jeep parent Stellantis, the final of the Big Three automakers involved in the strike, has not yet announced its cost expectations.
The UAW contracts, which were ratified by all three companies in November, provide significant wage and benefit increases for unionized workers.