According to the Detroit Free Press, starting on Monday, Ford will cut two shifts at its Dearborn, Michigan, facility, going down to one shift per day. It is also cutting a shift at its Kansas City, Missouri, assembly plant, going down to two shifts per day.
Ford’s F-150 pickup truck is the financial backbone of the 117-year-old company and is a top seller in the U.S. with roughly one F-150 rolling off the assembly line every minute. Luckily, both plants will be back to three shifts starting Feb. 15.
“We are working closely with suppliers to address potential production constraints tied to the global semiconductor shortage and working to prioritize key vehicle lines for production, making the most of our semiconductor allocation,” the company said in a statement, according to the Associated Press.
Ford’s announcement didn’t seem to have an effect on shares of Ford on the stock market, with trading up by about 3 percent during intraday trading late Thursday morning. The company was expected to report its fourth-quarter earnings and give guidance for 2021 after the market closed Thursday, per CNBC News.
The global semiconductor shortage
Semiconductors – or chips – are an essential component of new vehicles today, They are used in everything – from automation, electrification, digital connectivity, and security, to infotainment systems and more traditional parts such as power steering. They’re also used in consumer electronics.
Because of the worldwide COVID-19 pandemic, supply and demand problems have grown to global proportions, and the auto industry has been hit hard. But the demand for vehicles rebounded in the fall last year, following a two-month shutdown of production plants
Automakers began warning about a semiconductor shortage late last year – right about the time lockdowns in many countries were being eased, and before the world was hit by a slew of coronavirus variants that put the skids on any progress and cut production lines again.
And Ford is not the only automaker feeling the shortage, either. General Motors will have downtime at three of its factories — one in the U.S, one in Canada, and one in Mexico — due to the chip shortage, starting February 8. Nissan, Fiat Chrysler, and Toyota have also been impacted by the chip shortage.
Actually, in related news, Qualcomm Inc, the world’s largest smartphone chip maker, warned it is struggling to meet demand, noting that a global semiconductor shortage is spreading.
Kumar Galhotra, Ford president of the Americas and international markets, described the chip shortage earlier this week as a “very dynamic situation.” Ford, as well as other automakers are working with their suppliers to resolve the issue as soon as possible. “It’s changing all the time, but we think we will be dealing with it for at least the first half of this year,” Galhotra told CNBC.
