The chip shortage just keeps getting worse…
While everyone was wowed by the premier of the all-electric Ford Lightning pickup truck, Ford quietly let a bomb drop: it would be temporarily closing 8 factories, cutting production of the Mustang, Bronco Sport, and F-Series. It hardly seems coincidental that the Blue Oval revealed that information while the media fawned over President Biden praising Ford’s push into electrification, but soon enough consumers will notice the effect of the announcement.
Meanwhile, Toyota has barely been affected by the chip shortage in North America. Find out why here.
The global microprocessor chip shortage has hit the automotive industry especially hard. And as we’ve reported before, Ford along with GM and Stellantis has been hit the hardest out of automakers in the US market.
Already, Ford has cut back on vehicle production this year by well over 300,000 units, including stopping Mustang production from May 3-7. Amazingly, the product line which has seen the deepest cuts is the highly-profitable, highly popular F-Series, which accounts for over 100,000 of those vehicles not made. Both numbers should continue to climb as the lost profits for the Blue Oval balloons after Ford has suffered years of financial disappointment.
Some might wonder why Ford is cutting its 3 most iconic product lines instead of rolling back other products. The fact is the automaker already trimmed back its offerings, so it doesn’t have much more fat to shed during these incredibly difficult times. While some competitors have just taken the hit on cars which carry thin profit margins or are slow sellers, Ford has been forced to trim into its muscle.
Three Ford facilities will be shut down for 2 weeks: Flat Rock Assembly plant (where the Mustang is made) from the week of May 31 through the week of June 7, Chicago Assembly Plant for the same time period, and the Hermosillo Assembly Plant in Mexico for the weeks of June 21 and June 28. Meanwhile, the Dearborn Truck and Kansas City Assembly plants will both be shuttered for 2 weeks, starting the week of May 31, plus experience a 3rd week of reduced production schedules starting on June 14.
For 3 weeks in June, the Ohio Assembly plant will be churning out Super Duty Chassis cabs and medium duty trucks. The rest of the month, that facility will also be closed. Also planned is a shutdown of the Louisville Assembly Plant in Kentucky from the week of May 31 through the middle of July – the longest of all the announced shutdowns, but it includes an already-scheduled summer shutdown period. The Oakville Assembly Complex in Canada will be closed from the week of May 31 through the week of June 28.
As the CNBC report pointed out, CEO Jim Farley told investors Ford was expecting a 50% cut of vehicle production for the second quarter of this year. Sadly, that’s still a 17% increase over production in the first quarter. COVID-19 shutdowns and the shortage of microchips as well as other vehicle components have taken a serious toll on the auto industry. Ford estimates by the close of the year, its financial losses from the chip shortage will total about $2.5 billion. It looks like we’re far from out of the woods when it comes to this mess, which is estimated to stretch into 2022.