Ford is reportedly forced to reduce its manufacturing output as the global chip shortage problem continues. The North American automaker will cut production at 8 of its factories across the United States, Canada, and Mexico.
Ford to Cut Output
In an interview with Reuters on Feb. 5, a spokesperson for Ford said that the automaker would begin its shutdown on Feb. 7. Among other factories, the decision will heavily affect the Ford plant in Kansas City, where the F-150 vehicles are produced. The F-150 is the automaker's most popular model.
This is not the first time the automaker had to limit its production of vehicles because of global chip shortages, and it is not the only one affected by the crisis.
In September, General Motors or GM suspended production of all models at all of its factories, except for four plants in North America.
Last month, the US Commerce Department stated that the chip shortage may last until the end of this year. Gina Raimondo, the Department Secretary, said that there hadn't been a concrete solution to the chip shortage problem yet.
Automakers like Ford have come up with their own solution. Last year, the automaker partnered with Global Foundries to increase the production of semiconductors in the United States, but the results of that partnership may not be visible for a while.
Ford expects to increase its production volume in the second half of 2022.
Ford Earnings Decline
The chip shortage did not just affect Ford's production, it also affected its earnings. The automaker reported a drop in its fourth-quarter earnings, but it promised to improve the numbers this year.
According to CNN, Ford had an income of $1.1 billion in the last three months of 2021. It is a significant drop from the $1.4 billion it earned in the last three months of 2020.
The New York Times is expecting the automaker to end up with $1.7 billion in the last three months of 2022, especially since Ford had teamed up with Global Foundries to fix the chip problem.
The number of cars that Ford sold globally decreased 11% last year. The shortage of chips and issues in the supply chain has forced several automakers to close their factories and limit the production of their models. It resulted in tight inventories of new car models.
Since production was so limited, car prices had increased. It also reduced the need for car companies to offer incentives and discounts to attract customers.
Analysts believe that Ford would go head-to-head with its rivals, like GM, which reported better earnings on Feb. 3. Analysts are also expecting Ford to increase its profitability even if there is still an issue with the supply chain.
The car company said that it is expecting to increase its full-year operating earnings to 25% as it will work in areas such as China and Europe to return its profits.
Ford CEO Jim Farley told investors that there had been progressed outside North America in the past few months. The company officials insisted that the results were looking good and that they had done an excellent job overcoming the issues they faced in the last months of 2021.
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Written by Sophie Webster
