An F-150 pickup truck at a Ford sales location in California.
Ford Motor Co. announced Wednesday (March 31) that it will significantly cut production at six North American vehicle plants, including highly profitable pickup trucks, due to a global shortage of automotive chips.
CNBC reported that Ford said the affected plants are located in Illinois, Ohio, Kentucky, Michigan and Missouri, as well as Ontario, Canada. The plants produce vehicles such as the F-150 pickup, minivan (vans), Explorer SUV and Escape SUV.
The company said the F-150 assembly plant in Dearborn, Michigan, will be shut down for two weeks beginning April 5 and will cancel one week of shifts beginning April 26, one week beginning May 10, one week beginning May 31 and one week of night shifts beginning June 21; the Missouri full-size F-150 assembly plant will be shut down for two weeks beginning April 5. assembly plant in Missouri will be shut down for one week beginning April 5, and night shifts at the plant will be canceled for eight weeks.
Ford said earlier that the shortage of automotive chips could reduce its profit by $1 billion to $2.5 billion in 2021. The company did not update this expectation on April 31, saying it would explain the impact of the chip shortage at its first-quarter earnings report to be announced on April 28.
Semiconductors are key components indispensable to the current new automotive entertainment systems, power steering systems and braking systems. As carmakers closed their factories for months to comply with government orders after last year’s outbreak, semiconductor suppliers turned to producing chips used in computers and other electronic devices. After the restart of economic activity in the summer, the demand for cars rose faster than expected by car manufacturers, so there was a shortage of automotive chips sweeping the world, leading car manufacturers continue to reduce production.
According to Bloomberg, market research firm IHS MARKIT released a new report on Wednesday predicted that the current global shortage of automotive chips, as well as the U.S. Texas February snowstorm caused by the statewide power outage, will reduce global production of 1.3 million vehicles in the first quarter.
The agency also said that the fire at the Renesas Electronics (Renesas) plant of Japanese automotive chip maker may continue to disrupt car manufacturers’ production plans in the second quarter. According to the agency’s analysis, semiconductor supply is likely to stabilize only in the fourth quarter.
Reduced production of new cars coupled with a rebound in tourism activity has pushed up the price of used cars in the U.S. and driven up the price of rental cars in many tourist destinations to a sky-high $300/day to $500/day.
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