Ford F-150 production slowed by parts shortage due to supplier fire

Posted May 10, 2018

Production of Ford's most profitable vehicle could be knocked out for several weeks in the wake of last week's fire that interrupted production at the Meridian Magnesium Products of America plant near Lansing, Mich., a person familiar with the situation told Bloomberg. It's a key profit generator for Ford. But the layoffs are likely to spread rapidly as Ford will nearly certainly trim production of engines, body panels and other parts and components in the F-150, while its suppliers will also cut production until the pickup lines begin rolling again.

Ford shares closed down 1.9 percent at $11.06.

"It is a very fluid situation", company spokeswoman Kelli Felker said Tuesday. Meridian makes the die-cast components in the trucks.

Ford could make up some of the lost production later in the year by running overtime.

"I think it's safe to say, we're going to see an impact over several days, but beyond that we can't say", said Joe Hinrichs, president of Ford global operations.

Meanwhile, production of the Ford Super Duty trucks has stopped, but no layoffs have occurred, she confirmed.

"The company has informed us that we have enough parts to build vehicles through Thursday".

The fire in the supplier plant lingered and was hard to contain because the magnesium that ignited couldn't be extinguished with water. That depends on how long the assembly lines are shut down. "Kansas City Assembly Plant is down this week due to a part shortage caused by a fire at a supplier facility". Automakers use magnesium parts to cut weight in vehicles, and improve fuel economy.

Ford Motor working with a key supplier to shift some parts production from MI to Ontario, Canada, after a fire and subsequent parts shortages forced the automaker to halt manufacturing of its highly profitable full-size pickups, according to sources familiar with the companies' plans.

Mercedes employs about 3,700 people who build about 286,000 vehicles annually at its Tuscaloosa, Alabama, plant, including the GLE and GLS SUVs and the C-Class sedan.

The fire also affected production of the Fiat Chrysler Automobiles plant in Windsor, Ontario, that produces the Chrysler Pacifica minivan.

"We do expect Ford will incur higher production costs during this shutdown period and potentially in the period immediately following the shutdown to the degree Ford elects to accelerate production to make up for this shortfall", Albertine wrote in a note to investors.

The automaker now has 84 days' supply of its F-Series vehicles.

"We have strong inventories", Erich Merkle, Ford's sales analyst, said in a statement.

Rosner added: "We will likely revisit our earnings estimates for Ford and its main suppliers once there is more clarity on the extent and magnitude of the production downtime".