Ford, Nissan Idling Production Due to Chip Shortages

Ford Motor Co. shut down production at a plant in Kentucky building utility vehicles as the semiconductor shortage of continues to wreak havoc on automakers.

The company added that the global semiconductor shortage — combined with parts shortages created by the central U.S. winter storm in February — is prompting Ford to build F-150 trucks and Edge SUVs in North America without certain parts, including some electronic modules that contain scarce semiconductors.

Ford plans to hold the incomplete vehicles for a number of weeks, then ship them to dealers once the modules are available and comprehensive quality checks are complete, the company said.

The automaker cancelled one shift Thursday and both shifts Friday at Louisville Assembly Plant due to a semiconductor-related part shortage. The production of the Ford Escape and Lincoln Corsair is expected to resume Monday on short shifts, with full production scheduled to resume Tuesday, Ford said.

Ford also said it was taking a hit in Europe, with down days at the company’s plant in Cologne.

Nissan forced to idle plants

The Dearborn, Michigan-based automaker isn’t alone, Nissan saying it’s been forced to slow or idle production at plants in the U.S. and Mexico due to chip shortages.

Nissan’s Smyrna, Tennessee facility suspended production of its Murano crossover until Monday. It also canceled plans to build the Rogue crossover, Maxima sedan and Leaf EV with workers on overtime this weekend to make up for volume previously lost.

The Altima, produced at its Canton, Mississippi location, is also shut down until Monday with weekend overtime to build its NV commercial vans scratched as well. In Aguascalientes, Mexico, output of the Versa subcompact and Kicks compact crossovers will be halted through Tuesday.

Production of the company’s Titan full-size and Frontier midsize pickups is unaffected. The company also cut production at a plant in Japan in January due to the shortages.

Reduced profits looming

In Ford’s case, it’s already faced a series of shutdowns. In January, it idled two of three shifts at its Chicago plant where it builds the Ford Explorer and Lincoln Aviator. It also had a previous slowdown at Louisville as well.

It also had to close its plant in Oakville, Ontario, in part due to chip shortages. The other reason was related to a production delay to ensure quality standards were being met, Ford officials said.

The costs tied to the production costs are covered in the financial updates we previously provided. “We said that if the semiconductor shortage scenario is extended through the first half of 2021, the shortage could adversely impact Ford’s adjusted EBIT by between $1 billion and $2.5 billion, net of cost recoveries and some production make-up in the second half of the year,” the company noted in a statement.

IHS Markit analysts predict chip-related supply issues will cost the industry nearly 1 million units of production in the first quarter. The issue is expected to hit bottom at the end of March, but the supply will remain tight into the third quarter.

Other automakers affected recently

Earlier this week, General Motors, which also has confirmed its profitability for the first-half of 2021 will be reduced, the shortage of semiconductors forced it to build certain 2021 light-duty full-size pickup trucks without a fuel-management module.

Honda also confirmed it halted production in the U.S. and Canada this week because of a shortage of semiconductors, which are a key element in a variety of electronic modules used in modern vehicles.

The semiconductor shortage began showing up late last year, followed the halt in production brought on the COVID-19 pandemic. Makers of consumer electronics moved in to purchase the semiconductors as demand for their products increased during the lockdown governments used to curb the spread of the virus.

The shortage of semiconductors also has prompted automakers to re-evaluate their dependence on just-in-time supply chains that have proven vulnerable to any number of challenges from the pandemic, to political disputes and even bad weather.

Michael Strong contributed to this story.