The UAW strike against Ford and the rest of the Detroit Three ended in late October, with the union securing major gains for its members across the board. Those gains include changes to compensation that will increase labor costs for the automaker, which is currently also grappling with its EV pivot, albeit at a reduced pace. While the contract is expected to cost the company about $9 billion through April 2028, the automaker has a plan for keeping expenses in check by changing operations at its assembly plants, according to recent comments by Ford CFO John Lawler.
Speaking at the Barclays 2023 Global Automotive & Mobility Tech Conference, Lawler said that the total cost of the UAW contract is estimated at $8.8 billion or $900 per vehicle through the life of the agreement, which runs through April 2028. But the company is planning to negate the expense by reducing plant inefficiencies and introducing automation at its plants.
“There are some things in the contract that we did secure that is going to allow us to drive some of those efficiencies. We can rebalance now, our lines, and our footprint, and what we’re doing within the US on a more regular basis, working with our union partners. That was more inflexible in the past. The level of efficiency that we have in our plants, I would say there’s opportunity there. Bryce has come in, as you know, Bryce is a new leader of our manufacturing facilities. We’re reinvigorating the lean initiatives, we’re reinvigorating the Ford operating system to drive those efficiencies. And we see there’s opportunities in automation, we see that there are opportunities in line balance, we see that there’s opportunities in the complexity of our vehicles as we take that out and reducing the number of hours to build the cars. So driving productivity is going to be our focus and our key to offsetting a large part of this contract.”
As Ford Authority, has extensively covered, the automaker is already tackling plant productivity by reducing the number of order combinations buyers can choose from in an effort to speed up vehicle production. It also partnered with Google in 2021 to develop a new infotainment system and introduce AI at its plants in an effort to boost assembly plant equipment reliability. Lawler has previously stated that the company has an $8 billion vehicle complexity cost gap when compared to its rivals.
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Comments
Exactly what Ford must do to reduce its recall and warranty costs – pay LESS attention. 🤦🏻♂️
If Ford has so many “inefficiencies” that getting rid of them will save costs, it makes you wonder how inefficient Ford is to begin with. Why did it take so long to get around to them?
So they are going to fire all the UAW workers then….I mean you talk about inefficient, it don’t get any worse than a union worker. Okay, maybe a federal or state worker. But not by much.
TRUTH!!
I work for the state of Maryland. I couldn’t agree more.
The main way all corporations reduce cost short term is a reduction in personnel, 9 billion in savings in 4 years is huge. Assuming an average salary of $100,000/year it would take a reduction of about 20,000 employees. I feel sure their buyers have already hammered their suppliers so expect automation and employee reduction