Lack of chips makes Detroit automakers struggle to maintain truck production

Detroit automakers are struggling to maintain extremely profitable pickup production and deliveries, as production disruptions around the world have led to a global shortage of semiconductor chips affecting the auto industry.

Ford Motor said Monday it will reduce a shift at its Kentucky truck plant in Louisville, which produces its larger F-series pickups and large SUVs. It is also temporarily shutting down an Ohio plant that builds vans and other trucks. Both factories are expected to return to normal production in a week, according to the company.

The discounts come after Ford joined General Motors on Thursday, confirming that it is partially assembling some trucks to be stored until the parts become available. Stellantis, the former Fiat Chrysler, also recently confirmed that it has partially assembled some of its older Ram trucks due to a lack of semiconductor chips.

“We work closely with suppliers to address potential production constraints related to the global shortage of semiconductors and work to prioritize key vehicle lines for production, making the most of our semiconductor allocation,” said Ford spokesman Kelli Felker , in an emailed statement.

For months, carmakers have given priority to assembling high-margin vehicles, such as pickups, by reducing the production of cars and crossovers. The latest actions show the difficulties that companies face while trying to maintain the production of those vehicles.

So far, GM and Stellantis have managed to maintain truck production and run longer than Ford, which previously cut off its F-150 pickup.

Semiconductor chips are extremely important components of new vehicles for infotainment, power steering and brake systems, among other systems. The parts can contain several sizes and different types of chips.

The consulting firm AlixPartners estimates that the shortage will reduce revenues in the global automotive industry by $ 60.6 billion this year. GM expects the issue to reduce its free cash flow by $ 1.5 billion to $ 2 billion this year. Ford said the situation could reduce its $ 1 billion earnings to $ 2.5 billion in 2021.

Drivers described the situation as fluid. Stellantis CEO Carlos Tavares said earlier this month that the deficit may not be fully resolved until next year. Chief Financial Officer Paul Jacobson last month described the absence as a short-term problem, saying the company hopes to cover much of the production lost due to a chip shortage in the second half of the year. Volkswagen CEO Scott Keogh told CNBC’s “Squawk Box” on Monday that the absence is expected to last until the fall, but “it’s something we sail week in and week out.”

GM has temporarily shut down or cut production at several factories that produce cars or crossovers to prioritize the production of full-size pickups and SUVs. Plants in Kansas and Ingersoll, Ontario, are expected to remain closed until at least mid-April. They closed in early February.

“GM continues to leverage every available semiconductor to build and deliver our most popular and sought-after products, including large trucks and SUVs to our customers,” said GM spokesman David Barnas. an e-mail statement. “We did not take downtime and reduce shifts at any of our large truck factories due to shortages.”

Another GM plant in Mexico is expected to reopen two weeks after it closed on February 8, while a plant in Michigan is expected to reopen by April after production stopped a week ago. Genetically modified plants in Brazil and South Korea were also affected by the shortage.