Ford forced to cut profitable F-150 pickup truck production due to semiconductor chip shortage

Key Points
  • Ford is cutting production at plants in Michigan and Missouri that produce its profitable F-150 pickup trucks due to a global semiconductor chip shortage.
  • The shortage began impacting the global automotive industry late last year.
  • Semiconductors are extremely important components of new vehicles, for areas ranging from infotainment systems to more traditional parts such as power steering.

In this article

Ford started resuming vehicle production in the U.S. on May 18, 2020 with new coronavirus safety protocols such as health assessments, personal protective equipment and facility modifications to increase social distancing.

DETROIT — Ford Motor is significantly cutting production of its highly profitable F-150 pickup trucks due to an ongoing semiconductor chip shortage plaguing the global automotive industry.

The automaker said Thursday that its Dearborn Truck Plant in Michigan will drop to one shift from three for a week beginning Monday, while truck production at its Kansas City Assembly Plant in Missouri will drop to two shifts from three. Ford spokeswoman Kelli Felker said both plants are expected to return to three shifts the week of Feb. 15.

"We are working closely with suppliers to address potential production constraints tied to the global semiconductor shortage and working to prioritize key vehicle lines for production, making the most of our semiconductor allocation," she said in an emailed statement.

Shares of Ford appeared to be unaffected by the cuts, trading up by about 3% during intraday trading late Thursday morning. The automaker is scheduled to report its fourth-quarter earnings and give guidance for 2021 after the market closes Thursday.

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Automakers and parts suppliers began warning of a semiconductor shortage late last year after demand for vehicles rebounded stronger than expected following a two-month shutdown of production plants due to the coronavirus pandemic.

Semiconductors are extremely important components of new vehicles for areas ranging from infotainment systems to more traditional parts such as power steering. They're also used in consumer electronics.

Ford's confirmed plans come a day after General Motors said it would take down production next week at four assembly plants in Fairfax, Kansas; Ingersoll, Ontario, and San Luis Potosi, Mexico. GM will also run a plant in South Korea at half capacity that week.

Ford and other automakers — from Nissan Motor to Volkswagen — have previously cut vehicle production due to the chip shortage.

Kumar Galhotra, Ford president of the Americas and international markets, described the chip shortage earlier this week as a "very dynamic situation." He said the company has been working with its suppliers to mitigate impact to its plants and resolve the issue as quickly as possible.

"It's changing all the time, but we think we will be dealing with it for at least the first half of this year," he told CNBC.