The microchip supply chain disruption doesn’t really hit you until you see the sea of trucks parked one after the other. Aerial views show only a portion of the over 60,000 to 70,000 Ford F-150 pickups sitting idle waiting to be completed. While it is expensive to shut down assembly lines, it is becoming a larger problem for Ford having to park so many trucks.
The Kentucky Speedway is where some of the 60,000-70,000 Ford trucks are stored
Since mid-April, Ford has been sending some Super Duty F-250 and F-350 trucks without the necessary chips to Kentucky Speedway. The Speedway is near where the Super Duty Ford trucks are manufactured in Louisville, Kentucky. But that venue only can hold around 5,000 vehicles.
“Ford will build and hold these vehicles for a number of weeks,” Ford spokesperson Kelli Felker told WCPO-TV. “Then it will ship the vehicles to dealers once the modules are available and comprehensive quality checks are complete.”
Only Ford knows for now how much holding F-150s for chips will cost
The same story is true in Detroit and Kansas City, where F-150s are also made. Empty lots and fields are now full of countless Ford pickups. Only Ford knows how much money this costs, but it has got to be hundreds of millions of dollars.
Plus, Ford has to take extra steps to ensure the trucks are ready for dealerships. That means increased inspections for the retrofit procedure. The good news is that Ford is finally getting its hands on semiconductor chips. But it is looking like the backlog could run to the end of 2021, and possibly beyond.
This is all a result of the COVID-19 pandemic, which shifted microchips away from vehicle manufacturing to electronic component manufacturing. The shift was partly due to computer and video game console sales skyrocketing as people looked to fill time during lockdowns. It was also based on what automakers anticipated needing with sales down during the height of the pandemic.
Prices of semiconductors have risen as companies bid up prices
Now, with the shortage has also come increased prices for semiconductors. That’s because electronics makers and car manufacturers are all bidding up the limited supply. According to the Taipei Times, “More than 30semiconductor companies have issued price adjustment letters, with product increases ranging from 10- to 30-percent.” So this is another hit that Ford will have to absorb.
Originally, Ford expected it would be short about 200,000 to 400,000 trucks in 2021. Now, it looks like that figure will explode to 1.1 million vehicles. Yet, Ford saw a $24.13 billion return in the second quarter of 2021. That compares favorably to the $16.62 billion for the same quarter last year. It estimates a loss of $2.5 billion from reduced supplies for 2021.
Who else besides Ford does this affect?
Ford is not alone. GM, Honda, and Mercedes-Benz are but a few manufacturers that have to shut down plants because of the chip shortages. Stellantis has seen shutdowns at eight of its 44 global manufacturing plants.
The Biden administration has set aside $52 billion to help acquire and ultimately develop and manufacture semiconductors. But this is more of a long-range move. At least it appears that the supply is slowly picking up. Right now, though, there is a sea of idle vehicles that must be dealt with.