Chip shortage has Detroit automakers scrambling to keep truck production

An employee works on a Ford Motor Co. Super Duty truck engine at the Ford Kentucky Truck Plant in Louisville, Kentucky on September 30, 2016.

Luke Sharrett | Bloomberg | fake images

Detroit automakers are struggling to maintain highly profitable pickup truck production and shipments, as manufacturing disruptions around the world have led to a global semiconductor chip shortage that is weighing on the auto industry.

Ford Motor said Monday it is cutting back on a change at its Kentucky truck plant in Louisville that produces its largest F-Series pickups and full-size SUVs. It is also temporarily closing a plant in Ohio that makes pickup trucks and other trucks. Both plants are expected to return to normal production in a week, according to the company.

The cuts come after Ford joined General Motors on Thursday to confirm that it is partially assembling some trucks for storage until parts are available. Stellantis, formerly Fiat Chrysler, also recently confirmed that it was partially assembling some of its older Ram trucks due to a lack of semiconductor chips.

“We are working closely with suppliers to address potential production constraints linked to global semiconductor shortages and working to prioritize key vehicle lines for production, making the most of our semiconductor allocation,” said the Ford spokeswoman. , Kelli Felker, in an emailed statement.

For months, automakers have prioritized assembling high-margin vehicles, such as pickup trucks, by reducing production of cars and crossovers. The most recent actions show the difficulties that companies face in trying to maintain production of these vehicles.

So far, GM and Stellantis have been more successful in keeping truck production running than Ford, which previously cut shifts on its F-150 pickup.

Semiconductor chips are extremely important new vehicle components for infotainment systems, power steering and brakes, among other systems. The pieces can contain various sizes and different types of chips.

Consulting firm AlixPartners forecasts that the shortage will cut $ 60.6 billion in revenue from the global auto industry this year. GM expects the problem to reduce its free cash flow by $ 1.5 billion to $ 2 billion this year. Ford said the situation could reduce its profits by $ 1 billion to $ 2.5 billion in 2021.

Automotive executives have called the situation fluid. Stellantis CEO Carlos Tavares said earlier this month that the shortage might not be fully resolved until next year. GM CFO Paul Jacobson last month called the shortage a “short-term” problem, saying the company expects to make up much of the lost production due to chip shortages in the second half of the year. Volkswagen of America Chief Executive Scott Keogh told CNBC’s “Squawk Box” on Monday that the shortage is expected to last into the fall, but “it’s something we’re navigating week after week.”

GM has shut down or temporarily cut production at several plants that produce cars or crossovers to prioritize production of its full-size pickup trucks and SUVs. Plants in Kansas and Ingersoll, Ontario, are expected to remain closed through at least mid-April. They closed in early February.

“GM continues to leverage all available semiconductors to build and ship our most popular and in-demand products, including full-size trucks and SUVs for our customers,” GM spokesman David Barnas said in an emailed statement. “We have not had downtime or reduced shifts at any of our full-size truck plants due to shortages.”

Another GMO plant in Mexico is expected to reopen in two weeks after being closed on February 8, while a plant in Michigan is expected to reopen in April after stopping production a week ago. GMO plants in Brazil and South Korea have also been affected by the shortage.


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