Ford has temporarily shut down production of F-150 pickup trucks after a fire at a parts supplier, but the automaker doesn’t expect the issue to negatively impact its full-year profit.
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The blaze on May 2 damaged a manufacturing facility in Eaton Rapids, Michigan, where Meridian Magnesium Products makes die-cast parts for automakers including Ford. With parts in short supply, Ford was forced to suspend F-150 production at the two plants that make the popular truck. The fire also caused a partial shutdown of F-Series Super Duty production.
“We are working closely with the supplier to manage the situation and to determine next steps,” a Ford spokesperson said in a statement.
Ford’s truck output in Kansas City, Missouri, was put on hiatus this week, and during a conference call with reporters late Wednesday, company officials said production at a Dearborn, Michigan, truck plant would shut down following the afternoon shift. F-Series Super Duty production is down at Ford’s Kentucky Truck Plant in Louisville, but the company expects to continue building Super Duty trucks in Ohio.
Approximately 3,600 workers in Kansas City are out of work until production can resume. The Dearborn shutdown will lead to temporary layoffs for about 4,000 employees.
Ford didn’t provide a timeline for when production can restart, saying it’s an hour-by-hour situation. Workers at the Dearborn truck plant have been told they could return to work as early as Monday, FOX Business’ Jeff Flock reported on “Cavuto: Coast to Coast.” The company said it’s working with other suppliers to minimize the disruption.
The F-Series lineup, including F-150 and Super Duty trucks, is Ford’s largest source of profits. Morgan Stanley recently estimated that the F-150 alone may be worth more than the whole company. Analysts believe Ford makes about $10,000 for every truck it sells.
Production delays could hurt the company’s financials in the short term, officials said, but over time, Ford will be able to make up for lost production once its assembly lines are up and running again. Ford backed its 2018 guidance for adjusted earnings of $1.45 to $1.70 per share.
Ford also said current inventory levels on dealer lots will satisfy demand for the F-150. Ford ended April with gross stock of 313,600 trucks, including the Transit commercial van. The company reported total truck sales of 92,338 during the month.
“We have strong inventories of America’s best-selling F-Series pickup,” the company said. “Customers won’t have any trouble finding the F-Series that best meets their needs. We have an 84 days’ supply.”
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Ivan Drury, senior manager of industry analysis at Edmunds, said it’s too early to determine how the production delay will affect sales.
“On average, it takes 76 days for an F-150 to sell, so the company does have a bit of a cushion,” Drury said. “But when you have a vehicle that comprises a quarter of your company’s sales, any production disruption is going to cause some consternation.”
Last week’s blaze hasn’t affected production of the Transit or large SUVs like the Ford Expedition and Lincoln Navigator.
This story has been updated.