Ford Expected to Slash Vehicle Production Over Chip Shortage
A global semiconductor shortage is expected to slash Ford Motor Co.’s vehicle output by up to 20% in the first quarter of this year, illustrating how deeply the fallout from the computer-chip crunch has hit the car business.
Ford said Thursday it plans to cut production of its F-150 pickup truck—the nation’s top-selling vehicle and the company’s biggest moneymaker—because of the shortage, a day after confirming a hit to output of several sport-utility vehicles. Losses of vehicle production globally in the first and second quarters could trim $1 billion to $2.5 billion from its pretax bottom line this year, executives warned while discussing fourth-quarter earnings. These latest actions mark a significant escalation in the chip-shortage problem that has disrupted the auto sector and other industries in recent weeks.
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On Wednesday, General Motors Co. reported its first hit from the chip shortage with plans to pause production for one week at three North American factories that mostly make compact sport-utility vehicles. The Detroit auto maker has been working to stay ahead of the problem for a few months, asking its suppliers before the holidays to stockpile chips.
But the hit to F-150 output underscores the potential severity of the chip shortfall. The truck is the source of most of Ford’s global profit. The disruption also comes as Ford has been trying to crank up production of a long-awaited design of the truck, a rollout that company executives have stressed is key to lifting profitability.
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As demand for laptops, gaming systems and other personal-electronics has surged during the pandemic, global chip makers have been slammed with semiconductor orders. Remote work has also fueled a boom in computing services and the data centers behind them—all of which is straining chip availability and leading to higher prices.
At the same time, car companies have in recent years become bigger purchasers of semiconductors, using them in everything from engine-control units and transmissions to the large tabletlike displays that are embedded in the dashboard. The industry’s shift to electric vehicles is additionally increasing the need for more software-based systems, analysts say.
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https://www.wsj.com/articles/fords-2021-to-do-list-is-topped-by-fixing-quality-problems-11612450536 (subscription)
