DETROIT — In its last earnings report before its labor contract with the UAW expires, Ford Motor Co.'s profits plummeted 86 percent on $1.2 billion in restructuring charges — and it's warning of more pain to come.
Ford said it expects up to $3.5 billion in restructuring charges this year, and its stock suffered the biggest single-day drop in three years last week after it issued a full-year outlook that fell short of analyst estimates.
The latest financial figures — along with earnings reports scheduled to come this week from General Motors and Fiat Chrysler Automobiles — are likely to color this year's negotiations with the union, which kicked off talks this month by arguing that automakers' recent record profits should be shared with rank-and-file workers.
Analysts are forecasting lower earnings per share from both GM and FCA. If so, all three companies could point to the results to help justify their demands for more financial flexibility in the next contract.
That could lead to contentious bargaining over how to reward workers in the future with profit-sharing or raises.
"It's all a big struggle between what is locked down into base wages and what's part of something that can be canceled in the event of a downturn," Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research in Ann Arbor, Mich., told Automotive News. "Given the same set of economic indicators, the union's motivations are to make things more permanent, where the company wants to make things more contingent. I think they will absolutely use the latest quarter's profits as a sign that all good things are coming to an end and there's likely to be more caution advised ahead."