Ford Forced to Halt Production on 2 Popular Models
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- Why does Ford need computer chips?
- What’s causing the shortage of semiconductor chips?
- Ford dealerships could feel the pinch
- Bad timing for Ford
Ford has announced that the global semiconductor chip shortage, which has affected a wide range of high-tech industries, will delay production of two of its most popular models.
Ford is temporarily closing its Michigan Assembly Plant, which employs some 3,000 people, to enable inventory to catch up. Starting May 17, the Ford Ranger Pickup and Ford Bronco SUV will both see their production halted for at least two weeks.
Ford is struggling to keep up with demand | Twenty20
Why does Ford need computer chips?
“They don’t make them like they used to!” These days, auto production relies just as much on computers as it does nuts and bolts.
Semiconductor chips are essential for infotainment systems, battery management, power steering, braking, and just about every other electrical component found in our cars.
What’s causing the shortage of semiconductor chips?
In recent years, the auto manufacturing industry has been one of the largest consumers of these tiny computer parts, but as many auto plants slowed operations due to COVID-19, their demand for chips declined.
Fortunately for the companies that make these chips, other industries stepped in to fill the void. Sales were redirected to manufacturers of consumer electronics, like video game consoles and home office computers. Now that automakers are once again ramping up operations, there are simply not enough chips to go around.
This problem is exacerbated by the ongoing trade war between the U.S. and China, where most semiconductor chips are currently made.
Ford dealerships could feel the pinch
Even if the Michigan plant can reopen at full capacity after the two-week shutdown, it has raised questions about the ability of Ford to meet demand. This is especially true for the Ranger, which is widely considered the most affordable pickup offered by the company (although it’s one of the most expensive trucks to insure).
According to Autotrader, the Ford Ranger has been selling well in 2021, enjoying a 30% increase in sales over the same period last year. If this demand continues into the spring and summer, showrooms across American could find themselves short on supply.
The impact on the relaunched Ford Bronco is harder to gauge. The Michigan Assembly plant was scheduled to begin production of early models now, ramping up to full production in the summer.
Despite the manufacturing delay, scheduled deliveries to Ford dealers across the country should still be met, according to a spokeswoman quoted by CNBC.
Bad timing for Ford
While Michigan could be the biggest casualty, Ford will also be shuttering plants in Illinois and Missouri for the same two-week period. Production of other popular models, including the F-150 and sixth-generation Mustang, could yet be affected.
The announcement regarding these shutdowns comes one week after CEO Jim Farley told investors the company could lose 50% of its planned Q2 production. Ford estimates the chip shortage will reduce annual earnings by an eye-watering $2.5 billion.
Ford can take some comfort in the fact that they are not suffering alone, as the semiconductor shortage is affecting every major automaker. While President Biden has sought to address the issue by investing in domestic mass production, sourcing the critical minerals and supplies needed will take several months. In the meantime, Ford will hope their supply chain recovers sufficiently to avoid any further delays.