Amazing that we continue to add millions of dollars of incomplete inventory to sit outside. No surprise that other industries that pay more for the chips are getting fulfilled first. Global Purchasing at its best. Still no one held accountable in management. Hitting platforms key to Ford's financial performance. Thinking it will be a tough quarter and tougher year!
From Detroit Free Press:
If you happen to notice a random parking lot filled with brand new (unsold) Ford F-150 trucks — or any other fleet of brand new vehicles — this is what a semiconductor shortage looks like.
People are sighting new stockpiles off I-96 west of Detroit and calling the Free Press, which took photos and drone shots Thursday to document the issue.
The situation is a multibillion dollar industry headache that won't go away.
"The chip shortage is a supply chain nightmare from h..l," said market analyst Jon Gabrielsen, who consults for manufacturing industry clients in North America.
"In the supply chain, missing just one part means you cannot produce the entire vehicle that uses the part. But with chips, it is any one of dozens of chips. And unlike a temporary delay due to a late shipment or even COVID impacting a single supplier plant, it takes years to design, build, and start up a chip plant so getting beyond the situation is not a short-term issue."
Both foreign and domestic automakers are affected. They've reported economic pain inflicted by the parts shortage in first quarter earnings and forecasted for 2021.
Industry leaders have made the Biden administration aware of the situation, caused by a combination of factory shutdowns, growing demand from every industry that uses technology and a limited number of suppliers.
"While the industry has always been capable and resourceful, the answer to this issue isn't easy and seems to be growing tougher with each passing day. If anyone relying on a source of chips isn't on edge right now, they're not paying attention," said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions.
"Vehicle production around the world has been hit by this shortage and no region has figured out a short-term remedy. This is a global problem requiring many players to solve it," he said Friday. "We are looking at production issues for much of the rest of the year for nearly all major automakers. There's just no quick fix."
Ford is a high-profile victim because it has so many new vehicles hitting the market in 2021: The Ford F-150, all-electric Mustang Mach-E, Bronco and Bronco Sport.
"Cars are 2021’s version of toilet paper in 2020. We are taking a lot of retail orders because we don't have anything (in stock)," Chad Wilson, general manager of Wilson Ford in Saginaw and Midland Ford, told the Free Press on April 1. "Normally, between our two stores, we'd have 150-180 F-series in stock. I think right now there might be 10."
The semiconductor shortage — combined with parts shortages created by the central U.S. winter storm in February — prompted Ford to build F-150 trucks and Edge SUVs in North America without certain parts, including some electronic modules that contain semiconductors.
"Ford will build and hold the vehicles for a number of weeks, then ship the vehicles to dealers once the modules are available and comprehensive quality checks are complete," the company said in a statement March 18.
Ford and pretty much everybody else globally have reduced production, temporarily closed factories and issued temporary layoffs.
"We are working closely with suppliers to address production constraints and will ship the completed vehicles as soon as we can," said Kelli Felker, Ford global manufacturing and labor communications manager. "The updates needed for these vehicles are tied to basic vehicle functions, such as windshield wiper motors. They are relatively simple updates."
Ford has said if the shortage is extended through the first half of 2021, as expected, it could mean $2.5 billion in economic damage.
General Motors has left open its options to manage the parts shortage, too.
“When there is a shortage of semiconductors that impacts production, in some cases we intend to build vehicles without certain modules and will complete them as soon as possible," GM has said. "This will help us quickly meet strong customer demand as more semiconductors become available. Several of GM’s plants have recently utilized this process and we will complete those vehicles as soon as possible.”
Automakers hope to make up production in late 2021.
These days, automakers and technology companies are competing with small companies for semiconductors. For example, a Texas engineering firm selling sensors that take temperature readings needed when pouring concrete at building, highway and bridge construction sites is seeing a squeeze, the New York Times reported on Friday.
"Like many other things in the modern world, from computers and cars to cash registers and kitchen appliances, the sensors require a couple of common, inexpensive semiconductors that have suddenly become a very scarce commodity," the Times said.
The headline read: "It’s a Roller-Coaster Ride: Global Chip Shortage Is Making Industries Sweat. The internet-connected world is completely dependent on the production of semiconductors."