The Atlanta Journal-Constitution
Ford’s F-Series truck faces halt in production
Production of Ford’s most profitable model line, the F-Series pickup, is likely to be knocked out for several weeks by a fire that’s cut off supply of critical parts to the automaker’s truck factories, a person familiar with the situation said.
Ford already has shut its F-150 plant in Kansas City and has halted production of its Super Duty trucks in Ohio and Kentucky. The automaker’s other source of the popular F-150, in Dearborn, Michigan, may go down this week, said the person, who asked not to be identified discussing speculative matters. The shutdowns could cost Ford as much as 15,000 F-150s per week, according to James Albertine, an analyst with Consumer Edge Research.
F-Series pickups generate most of Ford’s profits, with Morgan Stanley recently assigning a higher valuation to the franchise than the entire company. The truck line, which includes F-250 and other larger models, hauls in about $40 billion in annual revenue, exceeding the annual sales of companies such as Facebook and Nike. The production shutdowns follow an explosion and fire last week at a Meridian Magnesium Products plant in Eaton Rapids, Michigan, which makes die-cast parts essential to F-150 production.
“The F-Series platform is critically important to Ford,” said Emmanuel Rosner, an analyst with Guggenheim Securities LLC. “We estimate it generates annual profits of at least $12 billion for the company, accounting for much more than the totality of Ford’s
global” profit.
Shares have dropped about 11 percent this year.
“This is an extremely fluid situation,” said Kelli Felker, a Ford spokeswoman. “We are working hard to get replacement parts. We’re working closely with the supplier to manage the situation and determine next steps.”
The fire in the supplier plant lingered and was difficult to contain because the magnesium that ignited couldn’t be extinguished with water. Meridian plant manager George Asher told Automotive News the company is working to move dies for stamping parts to its plants in Ontario and the U.K. The fire has also interrupted production at U.S. factories of General Motors, Daimler and BMW, according to the industry publication.
There are relatively few suppliers of magnesium parts, which means the auto companies could
be without critical components for some time.
“There’s not a lot of this type of supplier around that has capacity to pick up that kind of volume,” said Kristin Dziczek, an economist and labor expert at the Center for Automotive Research. “This isn’t like picking up screws at the hardware store.”
Ford said Wednesday that it halted production of Super Duties, comprised of F-250 through F-750 models, but the factories in Ohio and Kentucky continue churning out other vehicles, including the Expedition and Lincoln Navigator full-size SUVs and the Econoline van. As a result, no workers have been laid off at those factories, Felker said.
The F-Series is so important to Ford that Albertine wrote he’s considering adjusting his earnings projections for the automaker once the full-impact of the supplier fire is known.