A hiccup for the truck that tamed Texas
After plant fire disrupts F-150 production, all eyes are on Ford
The nation’s best-selling pickup, the one that branded itself in the lore of the 850,000-acre King Ranch, that has conquered those thorny mesquite plains of South Texas, the wild mountains of the Big Bend and the concrete canyons of Houston – has, for the moment, run out of gas.
Ford has a little more than two months of inventory on the F-150, after a fire at a magnesium parts plant in the Midwest prompted it to shut down all production of the vehicle and scale back production of larger F-series models.
It’s not clear when Ford can restart two assembly lines that make the F-150, but analysts and dealers seem confident that Ford will find a way. Its truck line makes up 10 percent of all U.S. auto production. But if the shutdown lingers, what’s a Texan to do? The state sells more pickups than any other; Houston more than any market. When legions of bass fishermen showed up during Hurricane Harvey to lend a hand with their boats, odds were good that any given vessel was towed by a Ford.
“In terms of Texas culture, I don’t think it’s a big deal short term, but
if it’s a sustained problem it will be an issue,” said W.F. Strong, communications professor at the University of Texas Rio Grande Valley and Texas raconteur.
He’ll be ordering the F-150 black King Ranch edition, with leather and wood trim. He’s waiting for the new model year. At this point his biggest concern isn’t that they’ll run out, but that customizations could be limited.
“I think for about 100 years we Texans were judged by our horses on their size and strength, and now we’re judged by our trucks,” said Strong, author of the forthcoming “Stories from Texas: Some of Them Are True,” including an ode to Harvey’s bass boat heroes.
A stroke of marketing genius
“It was a stroke of marketing genius, 15 years ago, when Ford wrapped their truck in the manly ethos of the King Ranch brand,” he muses in one of his essays. “Every leather seat within the truck is emblazoned with the King Ranch Running W cattle brand. Macho sublimity.”
Ford’s F-150 lists for as little as $27,700 to more than $70,000 for a fully decked-out Platinum model. Measured in horsepower, they are vestiges of a frontier lifestyle to which Texans cling, even though we may never take them off road, Strong said. “Houston and Dallas people are still living the dream of the ranch.”
That dream isn’t likely to be interrupted, said Frank Pierce, general manager of Sterling McCall Ford in Houston. His dealership has an unusually high inventory of F-150s because of a soon-to-be-completed remodel, and all signals from the company point to a supply rebound. They haven’t backed off buyer incentives, he said.
“I think we’re just going to go hard until there’s an actual problem,” Pierce said. “I don’t know that it’s actually going to go that far.”
If it did, “it would mean a lot to a lot of people,” he said. “The F-150 is the staple of everything we do.”
There’s little danger of customers defecting to another brand, said Michelle Krebs, senior analyst at AutoTrader. The loyalty rate for full-size pickups is the highest in the industry at about 70 percent, she said. For those who do shop around, Ford’s troubles come as its main competitors come out with new or redesigned products, including the Dodge Ram 1500, Chevy Silverado and GMC Sierra.
“It was going to be a really competitive truck year anyway,” Krebs said.
Calming Ford investors
Ford has assured investors that impacts will be short term, and it has not changed its stock guidance, projecting a full-year earnings per share of $1.45 to $1.70.
“I have a couple of customers who I have trucks on order for that are just concerned, but once the trucks are assigned a VIN number, the parts are allocated for them,” said Paul Diamanti, a 10-year sales veteran at Sterling McCall.
Bob Leaumont, 71, was trading in a 2007 F-150 with 119,340 miles for a 2018 model. He’s owned three of them.
“It has always been dependable,” he said. “It’s a myth that they’re going to run out.”
Company executives told reporters a Ford crisis team is on site at the Eaton Rapids, Mich., parts plant and working to move tools from there to a Canadian plant to resume production. Eaton Rapids City Manager Aaron Desentz told the Detroit Free Press that Meridian believes it can be up and running in 120 days.
But analysts said switching to a contingency supplier may be tricky. The lightweight magnesium parts industry is still immature and other affected automakers – including Fiat Chrysler and Mercedes – likely are courting the same short list of alternate sources, said Kristin Dziczek, vice president of the Center for Automotive Research's Industry, Labor & Economics Group.
The May 2 fire at Meridian Magnesium Products severely damaged a smelting area and put about half the plant out of work. Lightweight magnesium parts increase fuel efficiency.
Ford said it has idled 7,600 workers because of the fire.
Dziczek said automakers including Ford, which sells 1 million F-series trucks a year, dug deep into their supply chains after a 2011 tsunami interrupted a Japanese supplier, and they developed better contingencies for critical suppliers.
Line is too valuable
“I don’t know that (Texans) are going to be separated from their pickup truck,” she said. “This is simply too valuable of a business line for Ford to have it be down for very long.”
Krebs wasn’t as bullish because of the relative rarity of magnesium parts suppliers.
“I don’t know if there’s a Plan B for this one,” she said. “I have not seen a firm plan or timeline.”
For now, Strong expects to order the King Ranch edition, with options of his liking, this fall. It suits his tall 6-foot-5-inch, 250pound Texan frame, his country upbringing in tiny Falfurrias, near the King Ranch at the northern edge of the borderlands. But there could be cause for a shiver later this summer.
“If the supply chain is getting cold,” Strong said, “then we’re going to have pneumonia here when it comes to trucks.”