At Ford, the Chip Shortage Isn’t Getting Any Better. There Are More Output Cuts.

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The semiconductor shortage that is constraining global auto production is like a bad cough. It just won’t go away.

Ford Motor (ticker: F) is taking more downtime because of a lack of chips.

The chip shortage “continues to affect Ford’s North American plants, along with automakers and other industries around the world,” a Ford spokesman told Barron’s in an email. “Behind the scenes, we have teams working on how to maximize production, with a continued commitment to building every high-demand vehicle for our customers with the quality they expect.”

Ford is taking down time at a Kentucky truck plant and Ohio assembly plant.

Investors shouldn’t be all that surprised by new curtailments. Ford management said deliveries would fall “a high single to low digit decline in the first quarter” back on their fourth-quarter earnings conference call in early February.

Ford’s first-quarter 2021 U.S. volumes came in at 521,334 vehicles, up 1% year over year. A 10% decline in U.S. volumes in the first quarter of 2022 would work out to deliveries of roughly 469,000 vehicles.

Ford delivered about 508,000 vehicles in the U.S. in the fourth quarter of 2021, down about 6% compared with the fourth quarter of 2020. The chip shortage is still a significant factor for the industry going into 2022.

For the full year, Ford expects improvement in the chip situation and plans to ship 10% to 15% more cars than in 2021. In the U.S., that would work out to roughly 2.1 million or 2.2 million vehicles. Ford delivered 2.4 million vehicles in the U.S. in 2019, before the chip shortage and the Covid-19 pandemic.

Ford investors don’t appear impressed, despite the fact that management gave the market a heads-up earlier in the year. Shares are down 3.4% in early trading. The

S&P 500
and

Dow Jones Industrial Average
are down about 1.3% and 1%, respectively.

Coming into Friday trading, Ford stock was down about 1.3% for the week. The S&P 500 was off about 0.5%.

Friday’s news isn’t only a factor for Ford. The rest of the industry faces similar issues.

General Motors (GM) stock might be reacting a little to the Ford report. GM shares are off 4.2%.

Tesla (TSLA) shares, however, are up 1% in early trading.

Write to Al Root at [email protected]