An employee works on a Ford Motor Co. Super Duty truck engine at the Ford Kentucky Truck plant in Louisville, Kentucky, September 30, 2016.
Luke Sharrett | Bloomberg | Getty Images
Detroit automakers are struggling to keep the production and shipping of highly profitable pickups up and running as production stoppages around the world have resulted in a global semiconductor die shortage that hits the automotive industry.
Ford Motor announced Monday that it is cutting off a shift at its Kentucky truck plant in Louisville that will produce larger F-series pickups and full-size SUVs. In addition, a plant in Ohio that builds delivery vans and other trucks will be temporarily closed. According to the company, both plants are expected to return to normal production in a week.
The cuts come after Ford confirmed to General Motors Thursday that it will partially assemble some trucks that will be stored until parts become available. Stellantis, formerly Fiat Chrysler, recently confirmed that some of its older ram cartridges were partially assembled due to the lack of semiconductor chips.
“We are working closely with suppliers to remove potential production constraints related to the global semiconductor shortage and to prioritize key vehicle lines for production to get the most out of our semiconductor allocation,” said Ford spokeswoman Kelli Felker in an email statement .
For months, automakers have been prioritizing the assembly of high-margin vehicles like pickups by reducing the production of cars and crossovers. Recent measures highlight the difficulties companies face in trying to keep these vehicles in production.
So far, GM and Stellantis have managed to keep truck production going better than Ford, who previously cut the shifts on its F-150 pickup.
Among other things, semiconductor chips are extremely important components of new vehicles for infotainment systems, power steering and brakes. The parts can contain different sizes and different types of chips.
Consulting firm AlixPartners predicts the shortage will reduce global auto industry sales by $ 60.6 billion this year. GM estimates the problem will reduce free cash flow by $ 1.5 billion to $ 2 billion this year. Ford said the situation could cut its profits by $ 1 billion to $ 2.5 billion in 2021.
Executives from the automotive industry characterized the situation as fluid. Carlos Tavares, CEO of Stellantis, said earlier this month the shortage may not be fully addressed until next year. GM CFO Paul Jacobson called the shortage a “short-term” problem last month and said the company hopes to make up for much of its production downtime due to the shortage of chips in the second half of the year. Scott Keogh, CEO of Volkswagen of America, told CNBC’s “Squawk Box” Monday that the shortage is expected to continue into the fall, but “it’s something we steer week after week.”
GM has temporarily closed or suspended production at several plants that manufacture cars or crossovers in order to prioritize production of its pickups and full-size SUVs. The Kansas and Ingersoll, Ontario plants are expected to remain closed until at least mid-April. They are closed in early February.
“GM continues to use every available semiconductor to build and ship our most popular and sought-after products, including full-size trucks and SUVs for our customers,” said GM spokesman David Barnas in an emailed statement. “We did not accept downtimes or reduced shifts in any of our large truck plants due to the lack of them.”
Another genetically modified plant in Mexico is expected to reopen in two weeks after the February 8 closure, while a plant in Michigan is expected to reopen in April after production stopped a week ago. GM plants in Brazil and South Korea are also affected by the shortage.