Ford Cuts Production Again Due to Semiconductor Supply Shortage

(Photo by WSJ)

[Asia Economy Reporter Yujin Cho] Ford Motor Company announced on the 30th (local time) that it will halt operations at eight North American plants starting this month due to a semiconductor shortage.

According to The Wall Street Journal (WSJ), Ford stated that more than six plants in the U.S., including those in Michigan, Kentucky, and Missouri, will reduce production for several weeks this month. The Chicago plant, which produces the Explorer vehicle, is scheduled to close for a month, and production of popular models such as the Escape and Mustang will also be scaled back or halted.

The Journal analyzed that Ford's additional production cuts signal that the semiconductor supply chain issues may be delayed much longer than the industry had anticipated. Previously, executives from major automakers including Ford expected the semiconductor chip shortage to peak around May to June and improve in the third quarter.

Although most automakers worldwide have suffered production cuts and plant closures due to the semiconductor chip shortage, Ford has been exceptionally hard hit. This is due to the 'just-in-time' production method, which supplies parts almost simultaneously with orders to reduce inventory burdens, being disrupted by unexpected factors such as COVID-19-related logistics issues, the Texas cold snap, and a fire at Renesas in Japan.

Ford reduced its production by 17% in the first quarter of this year due to the semiconductor supply shortage, and production dropped by about half in the worsening second quarter.

According to research firm LMC Automotive, Ford's production disruption is estimated to have reached 350,000 units as of the end of May this year. Ford had previously forecasted in April that the annual production disruption for this year would reach 1.1 million units.

General Motors (GM) is also expected to halt or reduce production at three assembly plants in North America this month due to the semiconductor shortage.

Global automakers including Ford, GM, Volkswagen, Toyota, and Honda have already been repeatedly implementing partial shutdowns and production cuts since the beginning of the year. Some brands like Nissan are releasing vehicles without high-end options that require semiconductors as a last resort.

This content was produced with the assistance of AI translation services.