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Ford partly assembling some vehicles, idling two plants due to chip shortage

Stock Markets Mar 18, 2021 09:46PM ET
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2/2 © Reuters. FILE PHOTO: Ford Motor Co's logo pictured in 2019 2/2

By Ben Klayman

DETROIT (Reuters) - Ford Motor (NYSE:F) Co said on Thursday it will for now assemble its flagship, highly profitable F-150 pickup trucks and Edge SUVs in North America without certain parts and idle two assembly plants due to the global semiconductor chip shortage.

The U.S. automaker said the chip shortage, combined with the shortage of a part caused by the central U.S. winter storm, is prompting it to build the vehicles and then hold them "for a number of weeks" until they can be completed and shipped. The affected vehicles number in the "thousands," a spokeswoman said.

Ford said it is also idling production at plants in Louisville, Kentucky, and Cologne, Germany.

The costs associated with these actions are covered in the Dearborn, Michigan-based company's previous forecast that profits this year could be hit by $1 billion to $2.5 billion due to the chip shortage.

The shortage, which has hit automakers globally, stems from a confluence of factors. Car makers shut plants for two months during the COVID-19 pandemic last year and canceled chip orders. Meanwhile, demand for chips surged from the consumer electronics industry as people worked from home and played video games. Now car makers must compete for chips.

Last month, Ford cut shifts at two plants that build the full-size F-150 trucks, a move that followed production cuts of other vehicles. Ford, like other automakers, has said it will prioritize and allocate chips to its highest-margin vehicles when it can.

Also on Thursday, Japan's Nissan (OTC:NSANY) Motor Co said the chip shortage has led it to cut production at its plants in Smyrna, Tennessee, Canton, Mississippi, and Aguascalientes, Mexico. It did not disclose how much volume would be lost for the action.

On Monday, General Motors Co (NYSE:GM) said it was building some light-duty full-size pickups without a fuel management module, shaving a mile per gallon from fuel economy. GM previously said the chip shortage could cut up to $2 billion from this year's profits.

The Ford trucks and SUVs being assembled without certain parts include some electronic modules, Ford said. It did not identify suppliers of the affected parts, but a spokeswoman said the parts needed for the F-150 and Edge vehicles are tied to basic functions, such as windshield wiper motors and infotainment systems.

Ford is canceling the late shift on Thursday and both shifts on Friday at its Louisville Assembly Plant, which builds the Ford Escape and Lincoln Corsair SUVs. Production is expected to resume on short shifts on Monday and full production the following day.

In Cologne, where the Fiesta (NASDAQ:FRGI) car is built, the plant is being idled March 1-16 and March 22. The company did not say what volume was being lost due to that action.

Ford partly assembling some vehicles, idling two plants due to chip shortage
 

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