By on May 9, 2018

2018 F-150 Power Stroke Diesel, Image: Ford

As we told you yesterday, Ford announced it will temporarily halt production of the F-150 and Super Duty after a fire at Meridian Magnesium Products of America knocked out a key supplier. While the Blue Oval isn’t the only automaker affected by the supply shortage, as General Motors, Fiat Chrysler, BMW, and Mercedes-Benz also report the likelihood of production interruptions, Ford has the most to lose.

Taking the company’s most profitable vehicle out of the mix for a few weeks is a big deal. During a bad month, Ford might sell around 50,000 F-Series trucks in the United States. But a good month can see around 90,000 deliveries, so an unplanned idle probably has the automaker tugging at its collar a little. Fortunately, Ford currently has a 84-day supply of F-series pickups. That doesn’t mean it won’t feel the pinch if the wait on parts takes longer than expected.

The factory shutdown affects F-150 production at the Ford Kansas City Assembly Plant, which Ford said will last until at least May 14th. Super Duty lines at Kentucky Truck and Ohio Assembly have also shut down. Ford’s Dearborn Plant is expected to go down temporarily in the near future.

So, how far have the ripples spread?

According to Bloomberg, the supplier issue could cost the automaker as many as 15,000 F-150s per week. That’s a lot of money. As Ford’s breadwinner, the F-Series is responsible for roughly $40 billion in annual revenue. “The F-Series platform is critically important to Ford,” said Emmanuel Rosner, an analyst with Guggenheim Securities LLC. “We estimate it generates annual profits of at least $12 billion for the company, accounting for much more than the totality of Ford’s global [profits].”

So long as the factory shutdowns don’t last too long, Ford should be okay. Line workers will have to put in some overtime once the lights come back on, but no one’s expecting the trucks to suddenly vanish from dealer lots this summer. However, as there are not an overabundance of suppliers for magnesium parts, automakers could be in for a legitimate wait.

Hoping for a swift solution, Meridian Magnesium claims it is working as quickly as possible to get equipment to its plants in Canada and the United Kingdom. Its Eaton Rapids facility suffered a critical level of damage from the fire. While not totally destroyed, a large portion of the main building has been rendered unusable. Employees were told by a company official last week they should expect layoffs, but a portion of the facility is expected to remain open (plants 4 and 5 were unaffected by the fire). “It is our intention to return to normal operations as quickly as possible,” George Asher, Meridian Magnesium’s plant manager, told his staff. At this point, no one has a sound estimate for how long that may take.

“This is an extremely fluid situation,” said Ford spokeswoman Kelli Felker. “We are working hard to get replacement parts. We’re working closely with the supplier to manage the situation and determine next steps.”

The supply shortage is far reaching, affecting multiple automakers. Automotive News reported that Mercedes-Benz will have to rejigger production at its plant in Vance, Alabama, where it currently builds the C-Class, GLE, and GLS. The automaker said it “cancelled production shifts in certain areas and adjusted production hours for our team members this week. We continue to assess the situation and are working with Meridian to restore normal production levels.”

General Motors reported it would temporarily halt production of its Chevrolet Express and GMC Savana at its Wentzville Assembly plant in Missouri on Wednesday.

BMW claims parts shortages would hinder assembly of the X5, built in South Carolina. But it noted its currently supply has kept operations running for the time being.

As for Fiat Chrysler Automobiles, the company said production of the Chrysler Pacifica minivan in Windsor, Ontario, will also be affected by the fire. The automaker reports it will begin “adjusting production schedules as needed to minimize plant downtime,” promising to make up any lost production.

[Image: Ford]

 

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10 Comments on “Ford Suspending F-Series Production After Supplier Fire, Other Automakers Affected...”


  • avatar
    pwrwrench

    Going back some time, there was a fire at the VW factory near Mexico City around 1980. The effected area was where they made the magnesium alloy engine cases for the air cooled motors. The destruction was so complete that VW restarted production in Germany which had ceased a few years before due to the end of Beetle production in Europe.
    New VW engine cases were very scarce for some time.
    Someone found a large number of cases from the Mexican plant that had failed to pass inspection. They were supposed to be destroyed and sold as scrap metal. Instead they got put in unmarked boxes and sold in the USA. Most of them worked okay, but some had low oil pressure or oil leakage. IIRC it took about five years to restore production at the Mexico City factory.

  • avatar
    highdesertcat

    You know, I see an opportunity here to put a premium on all available brand new F150 and SDs currently in the wild.

    OTOH, I would advise GM and RAM to put a little more incentive on the hoods of their trucks as a “No Shortages Here” or “We Have Plenty Available” sales campaign.

    Buyers of Tundra and Titan don’t need enticement since they wouldn’t buy a Ford, GM or RAM truck anyway.

  • avatar
    indi500fan

    Looking at some Michigan based reports, it appears the magnesium parts factory won’t be down all that long. I suspect Ford can make up the shortfall over the summer if they want to.

  • avatar
    dusterdude

    I imagine the supplier will be on the hook for a few bucks with Ford !

  • avatar
    redapple

    This is going to be a BIG DEAL. There isnt that much open capacity in MAG just waiting. It will have to be created. I ve been in this plant. It is large and VERY BUSY.

    Just building the tooling will take 2-3 months and then add on PPAP.

    Yes, they moved some CAPY to other Meridian plants, but unless they were running at 50% capacity, they dont have the room to take all the work from Eaton Rapids. Getting all new equipment and rebuilding a plant and tune in is a 1 year project minimum.

  • avatar
    Maxb49

    Now imagine that this fire happened after Ford ceased car production.

    Fire Hackett now.

  • avatar
    IHateCars

    I’m wondering how EBFlex and akear will spin this as being Ford’s fault….

    • 0 avatar
      Lorenzo

      That’s easy – with sole source supplier using just in time manufacturing, a company needs to keep stock, or enough reserve in the form of continuous shipments in transit. There are probably a bunch of other slams on Ford that could be used.

      It’s just like the Lear strike affecting Chrysler – maybe they should have kept a small contract with Johnson Controls, just in case. Of course, that doesn’t square with lean manufacturing, and events like this are bound to result in disruptions.

      The only remedy is what has been suggested, allocate sales and prices based on supply and demand. I expect the automakers to do just that with their customers, the dealers, who will do to their customers what was done to them.

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