Ford cutting production, temporarily shutting down plants amid chip shortage

Ford is cutting back on production and issuing a series of temporary plant shutdowns as the automaker continues to feel the pain from a global semiconductor chip shortage.  

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The announcement was made via an internal memo obtained by FOX Business, which include the following changes:

• The Chicago assembly plant will be down the week of May 31 and will operate on a reduced schedule the week of June 7.
• The Flat Rock, Michigan assembly plant will be down the weeks of May 31 and June 7.
• The Dearborn truck plant in Michigan and the Kansas City assembly plant – truck line – will be down the weeks of May 31 and June 7 and will operate on a reduced schedule the week of June 14.
• The Hermosillo, Mexico assembly plant will be down the weeks of June 21 and June 28.
• The Louisville, Kentucky assembly plant will be down starting the week of May 31 through the week of June 28.
• The Oakville, Canada assembly complex will be down beginning the week of May 31 through the week of June 21.
• The Ohio assembly plant will produce only Super Duty Chassis cabs and Medium Duty trucks the weeks of May 31, June 7 and June 14.

"Our teams continue making the most of our available semiconductor allocation and will continue finding unique solutions to provide as many high-quality vehicles as possible to our dealers and customers," Ford said in a statement. 

The vehicles impacted from the shutdown range from the Ford Mustang and Escape crossover to the F-150 pickup and the Bronco Sport SUV. 

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The move comes a day after President Biden toured the company's new Rouge Electric Vehicle Center in Dearborn, where Ford will produce its recently announced all-electric F-150 Lightning pickup, which will be officially unveiled Wednesday evening and is expected to go on sale to the public sometime in mid-2022.  Ford has said the new truck will be built by union laborers and that it expects to spend about $700 million and create 300 new jobs.

Biden used the visit to promote the American Families Plan, his sweeping infrastructure package that would allocate $174 billion for investments in electric vehicles. The White House said the money will "enable automakers to spur domestic supply chains from raw materials to parts, retool factories to compete globally and support Americans workers to make batteries and EVs."

The measure would also provide sales rebates and tax incentives to encourage Americans to buy electric vehicles, and offers grant and incentive programs to state and local governments to expand the number of electric-vehicle chargers that are available. The plan would replace 50,000 diesel transit vehicles and switch at least 20% of school buses to electric vehicles. 

"The future of the auto industry is electric," Biden said. "There's no turning back."

Ticker	Security	Last	Change	Change %
F	FORD MOTOR CO.	10.80	+0.07	+0.65%

Ford chief financial officer Jim Lawler told analysts on company's first quarter earnings call last month that they expect to lose about 50% of planned second quarter production due to the chip shortage, a quarter-over-quarter increase of 17%. 

"While we expect the flow of chips from Renesas to be restored in July, we and many in the industry now believe the global shortage may not be fully resolved until 2022," Lawler added. "So our outlook now assumes we lose roughly 10% of planned second-half production."

Ford predicts the shortage will drive a total loss for 2021 of about 1.1 million wholesale units, or $2.5 billion in earnings before interest and taxes (EBIT), the high end of guidance given in February. The full-year adjusted EBIT guidance now ranges between $5.5 billion and $6.5 billion and full-year adjusted free cash flow is expected to range between $500 million to $1.5 billion, including a $3 billion adverse impact from the chip shortage. 

Fox Business' Megan Henney contributed to this report.