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Besides Ford, the global semiconductor shortage has also prompted Chinese automaker Nio to announce a similar halt in its car production for 5 days.
The current global semiconductor shortage is set to cause a reduction in the production activities of American multinational automaker Ford Motor Company (NYSE: F). With the car production industry buckling under the weight of the menacing shortage, the Dearborn, Michigan-based auto giant will be closing cutting down production in 6 of its plants in North America according to a CNBC report.
The cut in production activities will impact plants that produce some of the company’s profitable pickup trucks including the F-150. Per the report, Ford will be canceling overtime shifts across its facilities in Ohio, Michigan, Illinois, Kentucky, Missouri, and Ontario, Canada while a scheduled closure will be seen from April through June.
According to Ford, from April 5 and April 12, the production of the F-150 in Dearborn will be down as it also looks to halt the plant’s overtime shifts in the weeks of April 26, May 10, May 31, and June 21. The stoppage of manufacturing activities in the Missouri plant will commence this Monday and is scheduled to last for a week.
The company’s assembly plant in Oakville Canada renowned for the production of the Ford Edge crossover will be down for three weeks beginning the week of April 12 while the Kentucky plant known for its Ford Escape and Lincoln Corsair production will be closed for 2 weeks also starting on the week of April 12.
The development has caused Ford (F) stock to underperform in the past trading session when compared to its core competitors. The shares closed down 1.69% to $12.25 on Wednesday as against the 5.08% growth of Tesla Inc (NASDAQ: TSLA), and Toyota Motor Corp (NYSE: TM) which soared 1.42% to $156.06 amongst others.
Impact of the Semiconductor Shortage on Ford and Others
Semiconductors are crucial components of most electronics and tech products including cars, and the shortage arose due to an unprecedented increase in demand as manufacturing activities resumed at full scale as auto brands returned to production post-COVID-19 pandemic. From the ongoing shortage, consulting firm AlixPartners said that the impact can result in an estimated loss of $60.6 billion in revenue from the global automotive industry this year.
The Ford Motor Company said the current shortage could cost it about $1 billion to $2.5 billion this fiscal year and noted it “will provide an update on the financial impact of the semiconductor shortage” alongside its Q1 report scheduled for later this month.
The ongoing shortage of semiconductors is also notably impacting other brands including but not limited to Nissan Motor Co Ltd (TYO: 7201) whose normal production activity will resume by April 6 according to Reuters, and General Motors Company (NYSE: GM).