Ford Warns Of Continued Production Halts Through Mid-April As Chip Shortage Worsens

Ford Warns Of Continued Production Halts Through Mid-April As Chip Shortage Worsens

Ford Motor Company has already begun another round of production halts for two major truck plants in North America as the global shortage of semiconductors worsens. 

WSJ reports the American carmaker said Wednesday it would suspend production for two weeks in April at its truck plant in Dearborn, Michigan. At its Kansas City, Missouri truck factory, the company announced production suspensions for up to a week. There are also preparations to reduce work shifts temporarily and eliminate additional overtime shifts at several other factories. 

The impact of the chip shortage is nothing new to Ford. In February, the company announced it would continue to produce its top-selling F-150 trucks and Edge SUVs without specific semiconductor components. Now it appears some of those production lines are extending production halts a month later. 

Ford has previously stated the chip shortage could lower its earnings by at least $1 billion $2.5 billion this year. Ford reaffirmed its guidance this week but is expected to provide a more in-depth report on the semiconductor shortage when it publishes quarterly results on April 28.

A Ford spokeswoman told WSJ the latest production halts at various plants will place affected factory workers on “layoff status during the downtime.” 

The continued disruption at Ford underlines the shortage of semiconductors has worsened, which may jeopardize specific industries’ recoveries. 

Readers may recall the shortage originated from a confluence of factors as carmakers shuttered plants during the virus pandemic last year. At the same time, lockdowns spurred remote working and increased demand for chips for consumer electronics. Sanctions against Chinese tech companies have also made the situation even worse. 

Ford is not the only automobile manufacturer in North America experiencing production woes tied to the shortage. Stellantis NV, the maker of Ram, Jeep, and Chrysler said last week that production halts at some of it plants will continue through mid-April due to lack of chips. Honda Motor Co. and Toyota Motor Corp. are others that idled their plants in March due to shortages. General Motors expects lost production could crush its pretax profits by $2 billion this year. 

Meanwhile, some carmakers’ shares have more than doubled in the last year on economic recovery hopes and prospects for electric vehicles. However, the current chip shortage threatens the global recovery. 

“It is a serious issue for the entire industry so everybody is suffering at the same measure,” said Nesche Yazgan, senior corporate analyst at BlueBay Asset Management. “This is especially relevant for the automotive industry since they have had the ‘longest’ chain with parts being delivered from different geographies.”

Mitsubishi UFJ Morgan Stanley Securities estimates the shortage would reduce global vehicle production by 1.5 million units this year.

Tyler Durden
Thu, 04/01/2021 – 14:00

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