By on January 19, 2022

Ford

Ford will be idling Mustang production this week due to an insufficient supply of semiconductor chips. For all the talk the industry made about getting over supply chain hurdles in 2021, manufacturers continue citing insufficient access to microchips as the primary obstacle preventing them from enjoying more routine operations.

The automaker confirmed the move on Tuesday, explaining that Michigan’s Flat Rock Assembly will be down until sometime next week. 

While the facility has a storied history with Ford’s relationship with Mazda, the site is now responsible for manufacturing the (real) Mustang. The Detroit News reported on the supply problem last night, explaining that these production issues are hardly unique to Blue Oval:

The production cut is just the latest signal that the shortage of the crucial component that powers many of the automated and electronic features in vehicles will continue to be a challenge more than a year after it started.

Toyota Motor Corp. said Tuesday that it is unlikely to reach its target of manufacturing 9 million vehicles this fiscal year through March because of the shortage, Bloomberg reported. The Japanese automaker plans to scale back production by about 150,000 units to 700,000 units in February, according to the outlet.

The semiconductor crisis emerged shortly after the pandemic in 2020 and was exacerbated by people staying home and purchasing small electronic devices using more-lucrative semiconductor chips. This resulted in an industry-wide shift away from vintage automotive chips offering narrower profit margins. Meanwhile, supply chains were in shambles following aggressive COVID restrictions — making it difficult for the Asian-based components to get into Western markets in a timely fashion.

This forced automakers to cut production and helped to create the empty lots that have encouraged dealerships to charged exorbitant fees for first and secondhand vehicles. Despite dealers making a relative killing from elevated demand, it’s estimated the situation has cost the global industry hundreds of billions of dollars in potential revenue. Analysts have stated that they’re expected the chip shortage to resolve itself by the end of 2022. But the same was said of 2021.

[Image: Ford Motor Co.]

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18 Comments on “Mustang Production Paused at Flat Rock Assembly...”


  • avatar
    Fred

    I assume most of these chips come from China and they are taking a zero tolerance towards covid. One infection and they shut down the factory. Until that changes we have no control over supplies.

    • 0 avatar
      FreedMike

      I agree. I can’t think of many positives from the outgoing administration, but trying to bring stuff manufacturing back “in house” was one of them. Unfortunately, the ex-prez made that into a personal dick-measuring contest between himself and the Chinese premier. Those usually don’t end up with anything being solved.

    • 0 avatar
      notapreppie

      I’m sure that’s a factor but it goes much deeper than just that.

      In the early part of the pandemic, car sales plummeted and car manufacturers didn’t really forecast for them to come back up the way they did. Because of this, they didn’t order as much as they should have. Semiconductor manufacturers filled the gap between their growing capacity and the automotive orders with everything else they could find.

      However, automotive semiconductors are all really old designs and they aren’t very fungible; that is, they can’t be made using modern equipment and processes. So, when the semiconductor manufacturers filled out their extra capacity with modern chips, they did it with tooling that couldn’t produce the old designs.

      Add to that the demand for high-end graphics chips for crypto mining, the fact that so many people are now working from home which came with a spike in demand for computers and associated electronics, the ever-expanding roll-out of 5G wireless networks, low-stock just-in-time manufacturing and logistics practices, and geopolitical tensions and, well, it really sucks.

      This is really a whole bunch of chickens coming home to roost.

      • 0 avatar
        Jeff S

        You hit the nail on the head. Old generation chips versus more profitable new generation chips and the demand for computers skyrocketed with more working at home and students staying at home for remote learning. Auto manufacturers cut back production when demand fell off and thus cut their orders for chips. As you said the newer generation of chips are more profitable. Seems like the auto industry needs to adapt to the newer generation of chips or make them internally.

  • avatar
    smicallef427

    “While the facility has a storied history with Ford’s relationship with Mazda, the site is not responsible for manufacturing the (real) Mustang.“

    It’s not responsible for manufacturing the real Mustang? Did you mean to write they’re not responsible for manufacturing the Mach E? I’m pretty sure they do make the real Mustang in Flat Rock

  • avatar
    FreedMike

    I’d have to think that if the Mustang plant and the F150 plant were competing for chips, the latter would get them.

  • avatar
    jmo

    Maybe this is a post idea for Matt. I just got an e-mail from the dealer that sold me my most recent car. They reiterated that there have a strict “no market adjustment” policy. That made an impression. It makes me think that when it’s time to buy a new car I keep that in mind. If they are charging a few bucks more, fine. I’m not going to scour the internet trying to save $500. Good behavior needs to be rewarded.

    My fear is that a lot of the people complain most about market adjustments are also the people who will most eagerly patronize that dealer if they are selling new Canyonero for $200 less.

    • 0 avatar
      FreedMike

      Yeah, but is the dealer truly selling the car for sticker price or less, or requiring you pay two grand for Tru-Kote, pinstripes and nitrogen-filled tires, and not calling the extra two grand a “market adjustment”? I’d be interested to know.

      • 0 avatar
        jmo

        Good point, I just looked at a popular SUV and the buy now price is the factory MSRP. There is no scamming that I can see.

        This is not to say he’s doing it all out of the kindness of his heart. It’s likely dealers who tow the line will get better allocations going forward.

      • 0 avatar
        SaulTigh

        My least favorite is the local Ford/Lincoln and Jeep/Dodge/Chrysler/Ram stores, owned by the same clown. They put a flashing taillight module on EVERY new car along with a big, gaudy octagonal red sticker on the back glass. Pisses me off so much just cruising their lot that I have vowed never to buy a car from them again (I bought my F150 before they started doing this, back in 2014).

  • avatar
    28-Cars-Later

    President Yellen must have called Dearborn and castigated them for not towing the “chips shortage” line.

  • avatar
    probert

    “This forced automakers to cut production and helped to create the empty lots that have encouraged dealerships to charged exorbitant fees for first and secondhand vehicles.” Whoa there pilgrim: Tesla increased production 87% to nearly a million cars, never had to to shut down a factory. In fact they’re nearing completion on 2 new ones, and have expanded existing factories. But hey – I guess the legacy makers will really show this upstarts how the big boyz do it!!! Sorry though, I know you hate Tesla and EVs – I know this is a arrow straight into your soul.

  • avatar
    conundrum

    Renesas of Japan was THE major automotive chip supplier with a third of the global market until their factory caught fire last year. Took ’em months until the end of June to claim they were 100% back. That accounted for 8% of the shortage last year alone. The South Koreans knock out a few chips via a little outfit name of Samsung, but Taiwan is the real hub of major production. Not sure China is really right up there, but as they don’t sit around and moan much like Western countries but get on with the job, no doubt they’re rectifying the oversight after Huawei was dissed on 5G in the West. It used to be ‘can do’ was an American trait, but that was decades ago and seems to have died out.

    So far as the Mustang is concerned and since sedans and coupes don’t sell very well, a coupla weeks of lost production isn’t keeping Farley up at night.

  • avatar
    AlexMcD

    My Dad bought a 4dr rear drive (79?) for me to drive in college and after. I drove it every day in Minnesota and it was a freak. At 40 below, I sat on the vinyl seat and it cracked around me.

    It had a carb but never had to crank more than a couple seconds before starting, even on the coldest nights.

    It ended up rusting out. I never had to deal with dealerships as I did my own maintenance. I do recall a survey from the 90s where Mitsubishi had the lowest ranked dealers.

    I had a stick so I never got stuck in the snow and it was a snowy couple of years in Minnesota.

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