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Ford F-150 Production Cut Amid Semiconductor Chip Shortage

Ford is not alone in suffering from a chip shortage that is crippling the auto industry.

Ford is forced to temporarily cut production at two plants in the United States that make the profitable 2021 Ford F-150 full-size pickup because of the global shortage of semiconductor chips. We will be watching to see if General Motors, which is keeping its truck and full-size SUV plants going while cutting production elsewhere to weather a shortage that began impacting the industry late last year, can gain a truck sales lead—even temporarily.

Ford's F-Series has been the best-selling truck in the U.S. for the past 44 years. GM has been able to claim supremacy when it combines sales of the Chevrolet Silverado and the GMC Sierra, but Chevy alone has not been able to take the crown. Also in the hunt is the Ram 1500.

Bragging rights aside, the F-150 pickup truck is Ford's bread and butter. Buyers are many and they are loyal. Ford keeps improving the profitable truck—the 2021 Ford F-150 is the 14th-generation—to keep it fresh.

The only thing that can really hurt F-Series sales is if Ford, for some reason, cannot make enough trucks to meet demand. That happened in March. The pandemic forced automakers to stop making vehicles for a brief time and subsequently affected Ford's North American profits.

Now it is a global shortage of semiconductor chips affecting Ford (and others), forcing the automaker to cut production at the Dearborn Truck Plant in Michigan from three shifts to one for a week beginning on February 8. The Kansas City Assembly Plant in Missouri will go down to two shifts, idling the third. Both plants will return to three shifts the week of February 15.

Ford previously shut down a plant in Louisville, Kentucky, which makes the Ford Escape and the Lincoln Corsair, for a week and a facility in Germany for a month.

Others Hurt By the Semiconductor Chip Shortage

GM will cut production at four plants next week in Fairfax, Kansas, which makes the Cadillac XT4 and Chevrolet Malibu; the CAMI Plant in Ontario that makes the Chevrolet Equinox; the San Luis Potosi Plant in Mexico that makes the Equinox, Chevrolet Trax, and GMC Terrain; and a plant in South Korea, which will run at half capacity.

Volkswagen was among the first to sound the alarm of the semiconductor chip shortage in December 2020, warning it was preparing for production disruptions. The company then made some production cuts in North America, Europe, and China. Audi also furloughed staff. Nissan was also early to react, curtailing some Note production in Japan in January because it was low on chips.

Stellantis (formerly FCA) has idled plants in Canada (Dodge Charger and Challenger, Chrysler 300) and Mexico (Jeep Compass) and will take down its minivan plant in Ontario on February 8 for three weeks. Daimler was forced to respond, too. Honda cut production in Japan (Honda Fit) and the United Kingdom (Honda Civic). Meanwhile, Toyota cut Tundra full-size truck production in San Antonio, Texas.

Vehicles Have Insatiable Appetite for Chips

The industry appetite for semiconductors continues to grow as cars add increasingly sophisticated technology. Electric vehicles only increase this demand.

Automakers must compete with the consumer electronics industry for the chips that go into smartphones, gaming consoles, computers, and televisions, all of which have been in high demand with people confined to their homes due to the global pandemic.

The industry expects to be grappling with the shortage of semiconductor chips for at least the first half of 2021. The shortage could cost the industry around $60 billion, according to analysts at AlixPartners.

In reporting its fourth-quarter 2020 earnings this week, Ford says the chip shortage could result in the loss of up to 20 percent of its production this quarter. For perspective, automakers around the world saw sales fall by 10-20 percent in 2020 due to the pandemic.