Breaking Stories

Ford Idles More Production Capacity. The Reason Isn’t What You Expect.

Text size

Demonstrators against Covid-19 vaccine mandates block the roadway at the Ambassador Bridge border crossing, in Windsor, Ontario, Canada on Feb. 9.

Geoff Robins / AFP via Getty Images


Ford Motor

and other auto makers have endured supply chain disruptions, inflation, Covid-related absenteeism, and a shortage of semiconductors in the past year–all constraining production and adding costs. Now a trucker blockade in Canada is further threatening production.

This week, protesters against the Covid-19 vaccine mandate in Canada halted traffic across the Ambassador Bridge, which connects Detroit, Michigan, and Windsor, Ontario. The blockade is another, albeit surprising, supply chain disruption that is forcing plants to idle because of a lack of parts.


Ford
,
according to reports, has idled some production capacity in Windsor and Oakville, Ontario, a town outside of Toronto. Ford didn’t immediately respond to a request for comment.


General Motors

(GM) and


Toyota Motor

(TM) production facilities have also been affected by the blockade.

“We continue to work with our suppliers to mitigate this situation,” said a GM spokesman. “However, Lansing Delta Township assembly canceled its second shift yesterday [Wednesday] and first shift today [Thursday] due to parts shortages.”

A Toyota spokesman told Barron’s that


Toyota Motor

Manufacturing Canada and Toyota Motor Manufacturing Kentucky were affected by the blockade.

“We expect disruption between now and this weekend, and we’ll continue to make adjustments to our production plans,” the spokesperson said, adding that the company expects no impact on employment levels from the recent disruptions.

This past weekend, Ford did confirm plans to idle capacity at some eight plants in Canada, the U.S., and Mexico. In this case, the continuing semiconductor shortage is to blame.

Ford stock edged up 0.4% in Thursday morning trading, while the

S&P 500
and

Dow Jones Industrial Average
were off 0.4% and 0.2%, respectively. Inflation readings for January came in higher than expected, spooking investors.


CNH Industrial

(CNH) CEO Scott Wine told Barron’s Tuesday that the light- and heavy-duty vehicle manufacturing industry is operating with roughly one week’s worth of production in the chip supply chain, compared with normal levels of about 12 weeks’ worth of production. Companies, including Ford and CNH, are scrambling with semiconductor suppliers to get allocated chips while writing new software for different types of semiconductors that are available.

The chip turmoil has been an issue for stocks, on and off, for much of the pandemic. Most recently, Ford stock fell 9.7% after reporting fourth-quarter numbers earlier in February. One of the issues that unnerved investors was a slower-than-expected production ramp-up early in 2022. Production plans at Ford and other auto makers indicate that chip supply won’t improve until the second half of 2022. Investors wanted a faster resolution.

Hopefully, the blockade represents a temporary problem for the industry; the Ambassador Bridge was partially reopened Wednesday evening, according to The Wall Street Journal. There are other border crossings that connect Michigan and Ontario, and Canadian politicians might come to a negotiated solution. For now, investors just have to watch and wonder what’s next for automotive production and supply chain disruptions in 2022.

Write to Al Root at allen.root@dowjones.com

What's your reaction?

Excited
0
Happy
0
In Love
0
Not Sure
0
Silly
0

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *