Ford stops all production of F-Series pickup, maintains earnings guidance

Meridian Fire

Ford F-150 production could be shut down — but that probably won't wreck 2018 sales

A fire at an automotive supplier plant in MI has prompted production of GM vans in Wentzville and Ford F-150 pickups in Kansas City, Mo., to temporarily grind to a halt.

The parts shortage is impacting the Dearborn Truck, Kentucky Truck and Kansas City Assembly plants which produce the F-150 and Super Duty models. Those are the only plants that make the truck.

"We do expect Ford will incur higher production costs during this shutdown period and potentially in the period immediately following the shutdown to the degree Ford elects to accelerate production to make up for this shortfall", he wrote Tuesday in a note, according to Bloomberg.

"We are working closely with the supplier to manage the situation", a spokesperson for Ford explained to CNBC. "We're confident that any impacts will be short term".

The shutdowns could last for several weeks, according to a person familiar with the situation, although plans are in flux as Ford seeks an alternative supply of the missing parts. The incident underscores concerns raised by some suppliers who worry about the auto industry's turn towards sole sourcing, or relying on a single parts manufacturer, for critical vehicle pieces.

Ford's F-Series have been among the best-selling trucks in the United States each year since its launch in 1977, Ford announced last year.

But if the shutdown lasts for a month, those shopping for a new truck may find that the version of the vehicle they want is unavailable. Those shortages are typical when vehicle inventory falls below 50 days.

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"This is an extremely fluid situation", Kelli Felker, a Ford spokeswoman, said in an interview. "When you're more dependent on only a few models to drive sales, the company's bottom line is much more sensitive to these kinds of unplanned setbacks".

Ford depends on the F-150 for a quarter of its profits.

A fire at automotive supplier Meridian Magnesium Products of America in Eaton Rapids, Michigan on May 2 is the cause for the shortage.

Fiat Chrysler said on Wednesday the fire affected production of the Chrysler Pacifica minivan in Windsor, Ontario, adding it is "adjusting production schedules as needed to minimize plant downtime (and) will make up any lost production".

"The F-Series platform is critically important to Ford", said Emmanuel Rosner, an analyst with Guggenheim Securities LLC. It also is more than four times the sales of its second best selling vehicle, the Escape SUV.

The automaker has already halted production of the F-Series at its plant in Kansas City. They will get most of but not all of their pay during the temporary layoff.

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