Ford has shut down a key source of production for F-150 pickup trucks after a fire at a parts supplier.
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The blaze on May 2 damaged a manufacturing facility in Eaton Rapids, Michigan, where Meridian Magnesium Products makes die-cast parts for automakers including Ford. With parts in short supply, Ford was forced to suspend F-150 production at a plant in Kansas City, Missouri, and lay off about 3,600 workers.
Ford confirmed that its Kansas City assembly plant is down this week because of the fire at the supplier facility.
“We are working closely with the supplier to manage the situation and to determine next steps,” a Ford spokesperson said in a statement.
It remained unclear if F-150 assembly at Ford’s plant in Dearborn, Michigan, will continue uninterrupted. The Wall Street Journal reported that Ford expects the facility to run out of Meridian-made parts as early as Wednesday. If Dearborn Truck Plant is brought to a stop, another 4,000 workers could be sent home until production resumes.
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The F-150, which is only built in Kansas City and Dearborn, is a major profit center for Ford. A complete shutdown to production could prove to be damaging to the company’s bottom line because the F-Series lineup, including F-150 and Super Duty trucks, is Ford’s largest source of profits. Morgan Stanley recently estimated that the F-150 alone may be worth more than the whole company.
For now, current inventory levels are expected to satisfy demand for the F-150. Ford ended April with gross stock of 313,600 trucks, including the Transit commercial van. The company reported total truck sales of 92,338 during the month.
| Ticker | Security | Last | Change | %Chg |
|---|---|---|---|---|
| F | FORD MOTOR COMPANY | 11.05 | -0.21 | -1.91% |
Ivan Drury, senior manager of industry analysis at Edmunds, said it’s too early to determine how the production delays will affect sales.
“On average, it takes 76 days for an F-150 to sell, so the company does have a bit of a cushion,” Drury said. “But when you have a vehicle that comprises a quarter of your company’s sales, any production disruption is going to cause some consternation.”
A letter to workers from the United Auto Workers union said Ford has enough parts to support Dearborn production through Thursday, according to the Detroit Free Press. The letter also said Ford is trying to find another supplier that can make the same parts.
Last week’s blaze didn’t affect production of the Transit, which is also built in Kansas City.
