Ford and the Global Semiconductor Shortage
Ford has been forced to manufacture several of their flagship F-150 pickup trucks without computers as the global semiconductor shortage has completely disrupted the flow of business. The pickup trucks will now be held at certain factories, incomplete, for a number of weeks while the company waits on the materials and parts it needs to finish production.
The semiconductor shortage has been a serious blow to business across the auto industry as most companies are just beginning to recover from the economic downturn caused by the COVID-19 pandemic. The lack of supply for the car company has also trickled down to affect the employees at Ford manufacturing facilities as the business has had to cut shifts and pause production at a plant in Louisville, Kentucky and Cologne, Germany.
The car company itself could suffer major losses as well, with business already tight from the lack of sales following the pandemic. In fact, with reportedly thousands of vehicles being affected by the shortage, the semiconductor shortage could cost the car company anywhere between $1 billion and $2.5 billion in projected earnings on the year.
Recovery Timeline and Effect on Auto Industry
While Ford is the latest car manufacturing company to be hit by the semiconductor shortage, business for companies such as General Motors (GM), Nissan, Honda, and Toyota has also been affected. In fact, GM is also building pickup trucks without certain computer parts, actually causing a drop in fuel efficiency for current models and possibly costing Ford $2 billion in annual profits. Both Honda and Toyota have announced production cuts to their North American factories as a result, while Nissan has had to temporarily cancel manufacturing at three different plants.
While business is expected to improve as the semiconductor shortage eases, this is not expected to happen until Q3 of the fiscal year, leaving Ford and other car companies scrambling to recover production losses. Especially following the shut down of business operations to prevent risk of infection last year, the car company and many others will be facing an uphill battle to reach pre-pandemic levels well into 2021.
About the Author
Tom Price is a writer focusing on entertainment and sports features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.