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Ford scaling back production as the chip shortage bites harder

The global chip shortage is still raging, and the auto industry is still feeling the heat. Ford, based in North America, has had to cut down its production as it can’t find a way around the problem.

The reduction in production will affect eight of Ford’s facilities scattered all over the US, Mexico, and Canada. Some plants will be temporarily shut down. Ford will start the adjusted production on February 7th.

Even the Kansas City plant where Ford makes the F-150 pickup trucks, its cash cow, is not spared. The pickup line will be idled while its Transit line will run a single shift. Centers in Michigan and Chicago in the US and Cuautitian in Mexico will have production suspended.

At Dearborn, Kentucky, and Louisville, the factories will run a single shift and scaled back schedules. At Oakville in Canada, Ford will suspend overtime production.

Ford did announce the chip shortage would cause a reduction in its production volume in the first quarter of 2022.

Ford has miserable company here as GM, another US-based iconic automaker, suspended production at its major plants last year after failing to secure enough chips. With things looking as they are, there might be no break in sight, with the US Commerce Department forecasting that the chip scarcity would last till at least the second half of 2022. This tallies with Ford’s prediction of significant improvement in production.

The company’s shares went south when it posted disappointing figures for the last quarter and even forecasted dismal performance for the present quarter. However, it seems GM will recover faster than its rival in vehicle production this year.

Meanwhile, Ford is not just folding its arms and waiting for things to change. It has teamed up with GlobalFoundries to increase semiconductor production in the US, although the effect will not be felt immediately.

Meanwhile, the US government is working to boost chip production in the country. The US House of Representatives recently passed the America COMPETES Act of 2022 that earmarks $52 billion to fund subsidies and grants for the semiconductor manufacturing sector. The bill also allocates about $300 billion for chip research and development.

The bill will enable the US to compete with China in chip production and wrestle industry dominance. However, there is a big if as there is no assurance that the bill will pass in its current form. This is mainly down to ideological differences between the two major parties on the federal government’s role in competing with China in the semiconductor business.

For instance, the Republicans argue that too many unnecessary items are devoted to climate change, citing the $8 billion set aside for the Green Climate Fund of the Paris Accord. The party also claims the bill lets China off the hook too easily.

However, both parties agree that the federal government needs to spend more money to help grow the local production of semiconductors. The presidency even sees chip production as a national security issue. Also, the chip shortage has been blamed for the inflation experienced by consumers in the country in recent months.

President Biden can only sign the bill into law after surviving both in the House and Senate. What it will look like when it lands on the presidential desk is yet to be seen.

Written by HackerVibes

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