An employee works on the 40 millionth Ford Motor Co. F-Series truck on the assembly line at the Ford Dearborn Truck Plant on January 26, 2022 in Dearborn, Michigan. The 40 millionth is a F-150, Tremor model in Iconic Silver and will be delivered to a customer in Texas.
(Photo : JEFF KOWALSKY/AFP via Getty Images)
Supply chain issues are wreaking havoc on Ford Motor again. On Friday, February 4, the automaker announced that it would be cutting production of several key products this week due to an ongoing shortage of semiconductor chips globally.
This week's vehicles scheduled for production downtime are the Ford F-150 and Ranger pickups, the Ford Mustang Mach-E electric crossover, and the Ford Bronco and Explorer SUVs.
Ford is also slashing production of its Lincoln Aviator SUV at its plants in Mexico, Michigan, Illinois, and Missouri due to the shortage in parts. Also affected by the production cuts are the F-150 and Ford Transit cargo vans which Ford assemble in its Missouri and Michigan plants.
Ford's shares drop after lower-than-expected production
The latest production cuts signal that the computer chip shortage that crippled the global auto industry last year remains a major problem in 2022. Ford's announcement comes a day after the automaker significantly missed earnings expectations by Wall Street because of lower-than-expected production. That resulted in Ford's shares tumbling 9.7 percent on Friday.
Ford issued an emailed statement, saying, "The global semiconductor shortage continues to affect Ford's North American plants - along with automakers and other industries around the world." Ford added that they have teams working behind the scenes on how to maximize production despite the shortage, with a continued commitment to building every high-demand vehicle for their customers with the quality they expect.
That being said, the production cuts are a worrying development for Ford and its investors, considering the vehicles affected are some of the company's most profitable and in-demand models. Ford expected a gradual improvement in the supply of computer chips this year, but that is certainly not the case at all, with sales and production being affected as a result.
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Can Ford rebound in 2022?
Last year, Ford suffered a huge drop in sales because of the global shortage of computer chips, selling just 1.9 million vehicles in the United States, a 6.8 percent decrease compared to its numbers in 2020. Ford and other automakers had to sporadically shut down their plants last year because of the shortage, and that scenario looms large once again in 2022 with semiconductor chips in short supply.
Semiconductors are essential components in new vehicles, mainly manufactured in Asia. Supply chain problems started to emerge when the COVID-19 pandemic struck in 2020, severely impacting the entire auto industry. The United States has suffered because of that, with prices spiking and inflation surging.
US President Joe Biden wants to bring computer chip production back to the United States in an effort to boost American auto manufacturing. Lawmakers in the US Congress have given the green light on legislation that will counter China's dominance in the semiconductor industry, setting aside tens of billions of dollars for research and manufacturing.
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