Ford, which is the second-largest U.S. automaker, will eliminate two of three shifts at its Dearborn Truck Plant next week, Reuters reports.
Meanwhile, its Kansas City Assembly Plant F-150 production will stop totally. And its Kentucky Truck Plant will be running on two shifts instead of three during the weeks of Sept. 6 and Sept. 13.
Ford Is Responding to Semiconductor Chip Shortage
The pandemic brought many unforeseen consequences. And the semiconductor chip shortage is among them.
The jump in demand for electronic devices during the pandemic has led to a shortage of semiconductor chips. That shortage has put the brakes on the auto industry throughout this year. And it shows no signs of abating in the immediate future.
The blockage of the Suez Canal in March of 2020 made matters worse; some companies have not yet recovered from its impact, Forbes reports.
The CEO of Renault, Luca de Meo, said this July that automakers can expect the chip shortage to last through 2022, per CarScoops.com. He said his major suppliers are calling it a “structural” problem. They say it will raise tension in the system regardless of production capacity.
An AlixPartners forecast this past May estimated that the chip shortage may wind up costing the auto industry as much as $110 billion in new car sales.
Automakers Were Caught Off Guard by the Shortage
“Semiconductor supply chains were kind of surprised by the pandemic,” Mixcomm CEO Mike Noonen told Forbes. “They did not expect to see the pandemic driving up demands for laptops and tablets… We are now in a world where every industry is either enabled by or dependent upon semiconductors. There isn’t one industry that is not influenced positively by semiconductors.”
“There is still going to be a semiconductor cycle except for rare events, such as the pandemic,” he added. “Hopefully, there will be a more controlled boom and bust.”
However, the Wall Street Journal recently reported that Volkswagen is warning the crisis for automakers may get worse over the next six months. The industry has relied too heavily on lean inventory. So, it was caught flat-footed when the pandemic hit.
Moreover, automobiles have grown more dependent on semiconductors to manage engine performance, safety features and navigation. Dr. Thomas Goldsby of the University of Tennessee told Forbes a modern car uses anywhere from 1,500 to 3,000 chips.
As cars become smarter, that number is likely to grow. Unfortunately, at least in the near future, that also means new cars will become scarcer.