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Ford Says Lost Truck Production Will Hit Second Quarter Earnings

Ford has closed truck plants in Kansas City, Missouri, and Louisville, Kentucky, and will shutter a third, in Dearborn, Michigan.

Reuters

Updated:May 11, 2018, 4:18 PM IST
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Ford Says Lost Truck Production Will Hit Second Quarter Earnings
A newly remodeled Ford F250 Super Duty truck is displayed in front of the new Louisville Ford truck plant in Louisville, Kentucky, U.S. September 30, 2016. (Photo: Reuters)
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Ford Motor Co's quarterly earnings will be affected by shutdowns at three U.S. truck plants caused by a fire at a key parts supplier, the U.S. automaker said while affirming its full-year earnings estimate. "We're confident that any impacts will be short term," said Joe Hinrichs, president of Ford global operations, in a media call. Hinrichs and purchasing director Hau Thai Tang said Ford was working with the supplier, Chinese-owned Meridian Magnesium Products, to shift production of the affected parts to other suppliers until the fire-damaged plant in Eaton Rapids, Michigan, can be repaired and production resumed A Meridian plant in Strathroy, Ontario, is among those sites that will temporarily make lightweight parts for the Ford F-150 and Super Duty pickups, as well as the Expedition, Navigator, Explorer, Flex and MKT utility vehicles. Meridian could not be reached for comment.

Ford has closed truck plants in Kansas City, Missouri, and Louisville, Kentucky, and will shutter a third, in Dearborn, Michigan. Expedition and Navigator remain in production in Louisville, Ford said. The May 2 fire, whose cause is being investigated by local authorities, triggered smaller production disruptions to other vehicle manufacturers, including General Motors Co, Fiat Chrysler Automobiles, Daimler AG and BMW AG, the companies said.

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But the most significant impact was felt by Ford, whose F-150 full-size pickup is the best-selling vehicle in the United States. The vehicle generated $41 billion in revenue last year, about 28 percent of total sales and the lion's share of its profits. Meridian supplies several lightweight structural parts for the Ford trucks and utility vehicles, including an engine compartment reinforcement piece for the full-size F-series pickups. Hinrichs said it would be at least several days and perhaps longer before alternate sites will produce the affected parts. A two-week production halt for the F-series could slice as much as $310 million from Ford's second-quarter profits, Buck Research analyst Joseph Amaturo wrote in a note Wednesday.

Hinrichs said Ford has an 84-day supply of F-series pickups at U.S. dealers so "we don't anticipate losing any sales." He said Ford should be able to make up the lost production later in the year by running overtime.

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Fiat Chrysler said the fire affected the production of the Chrysler Pacifica minivan in Windsor, Ontario, adding it was "adjusting production schedules as needed to minimize plant downtime (and) will make up any lost production." GM said on Wednesday it had temporarily halted production of Chevrolet Express and GMC Savana full-size vans at its Wentzville, Missouri, plant because of parts shortages caused by the fire. Daimler and BMW acknowledged that they also had parts shortages from Meridian, resulting in minor production disruptions at their U.S. plants in Alabama and South Carolina. Meridian, owned by Chinese supplier Wanfeng Auto Holding Group, also provides parts to Tesla Inc among others, according to the websites of Meridian and Wanfeng.
| Edited by: Manav Sinha
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