Semiconductor shortage, other supply chain issues cause more auto production disruptions
The auto industry continues to bear the fallout from a protracted shortage of semiconductors coupled with other supply chain issues that are wreaking havoc on auto production worldwide.
Ford Motor Co. confirmed Monday that its Ohio Assembly Plant in Avon Lake, Ohio, will be down this week. Workers at the plant build medium-duty trucks, E-Series vans, and Super Duty trucks. Meanwhile, the Blue Oval's Kentucky Truck Plant — which builds Super Duty trucks as well as the Ford Expedition and Lincoln Navigator — canceled an overtime shift over the weekend and will cut one out of three shifts this week.
Ford attributed this week's production cuts to "a parts shortage related to the global semiconductor shortage." Both plants are scheduled to resume full production next week.
Stellantis NV said Monday that, in response to the microchip shortage, it is building and holding Ram 1500 Classics built at Warren Truck Assembly Plant in Michigan and Saltillo Truck Assembly Plant in Mexico, a tactic that some automakers have employed in a bid to keep assembly lines churning out high-margin trucks and SUVs.
"When the component that requires the chip becomes available, we will complete the build, then perform extensive quality verifications before shipping finished trucks to dealers," spokeswoman Kaileen Connelly said in a statement.
General Motors Co. did not have any new production impacts to share Monday, but previously halted production at its Lansing Grand River plant (which builds the Chevrolet Camaro and Cadillac CT4 and CT5) and San Luis Potosi plant in Mexico (which builds the Chevrolet Equinox and Trax and GMC Terrain SUVs) through the rest of the month.
Other GM plants facing extended downtime are in Kansas where the Cadillac XT4 SUV and Chevrolet Malibu are built, and in Ontario where the Equinox is built. A plant in Brazil also will have some downtime in April and May.
GM has said the shortage could result in a $1.5 billion to $2 billion hit to earnings in 2021. Ford has said that if the semiconductor shortage lasts through the first half of the year, adjusted earnings could take a hit of between $1 billion and $2.5 billion.
Ford — which has had numerous production disruptions this year — said last week that it would build F-150 trucks and Edge SUVs in North America without certain parts, including some electronic modules that contain semiconductors, and then hold the vehicles "for a number of weeks." They will ship them to dealers once the modules are available and quality checks are completed.
Automakers worldwide have been contending with a combination of the chip shortage — which arose after automakers pulled back on orders when the COVID-19 pandemic hit and consumer demand dropped, ceding production capacity to makers of high-demand consumer electronics — as well as other supply chain issues related to recent winter storms and the pandemic. Port blockages, too, have led to delivery delays.
AutoForecast Solutions, a global automotive forecasting firm, currently estimates that 1.1 million units of auto production will be lost globally through the first half of the year, with the potential for as much as a 1.94 million-unit loss and the possibility that some factories will be affected into the second half of the year. However, some of that lost volume could be made up once the semiconductor shortage eases.
Meanwhile, the Associated Press reported Monday that a fire at a plant owned by Japanese chipmaker Renesas could deepen the shortage.
The company, which makes chips for Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co., expects production at one of the buildings at its Naka Factory in Hitachinaka to be halted for a month.
Renesas said two-thirds of the products made in the building could be produced elsewhere, although “due to the recent increase in demand for semiconductors, the situation does not allow for all products to be immediately produced alternatively.”
Separately last week Nissan said it was temporarily shutting down production at factories in Smyrna, Tennessee; Canton, Mississippi; and in Aguascalientes, Mexico, due to the chip shortage. Volkswagen AG, too, has said that it has been affected by the shortage and forced to delay production of some models in order to keep other factories running.
Toyota announced last week that it would see disruptions to production of Camry and Avalon sedans and the hybrid RAV4 SUV in Kentucky, engines in West Virginia and Tacoma pickups in Mexico due to a shortage of petrochemicals resulting from extreme winter weather in Texas and Mexico.
Honda said last week that all of its auto plants in the U.S. and Canada were being affected by "a number of supply chain issues related to the impact of COVID-19, congestion at various ports, the microchip shortage and severe winter winter over the past several weeks."
Staff Writers Breana Noble and Kalea Hall and the Associated Press contributed.