Ford Shutters 8 Factories Due To "Persistent Supply Chain Disruptions"

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by Tyler Durden
Sunday, Feb 06, 2022 - 08:30 PM

Ford Motor Co. tumbled into a bear market after a fourth-quarter profit and sales missed Wall Street expectations. Chief Executive Jim Farley warned of "persistent supply-chain disruptions" limiting its ability to meet strong demand.

Reuters reports the Detroit automaker will shutter eight factories in the US, Mexico, and Canada, beginning on Monday as it copes with chip shortages. 

Production at factories in Michigan, Chicago and in Cuautitlan, Mexico will be suspended. In Kansas City, production of its F-150 pickup trucks will be idled while one shift will run for production of its Transit vans.

The Detroit automaker will also run a single shift or a reduced schedule at its factories in Dearborn, Kentucky, and Louisville while removing overtime at its Oakville factory in Canada.

All changes will be in place for the week beginning Feb. 7. -Reuters

On Friday, Ford shares plunged 10% after the automaker reported fourth-quarter profit and sales that fell short of expectations. Shares of the company have already plunged into a bear market. Shares closed under the 100DMA on Friday and may find support on the 200DMA around $16.15 level if downward pressure on the stock is maintained. 

Ford's earnings miss "was a combination of lower volumes (chip shortage/supply chain disruption), higher raw material costs, and higher mobility spending," BofA Securities' John Murphy told clients in a note Friday. 

Reuters' report paints a challenging 2022 backdrop for the company as it continues having trouble sourcing chips, an ongoing issue for well over a year, and still not yet resolved. 

The good news is Ford's turnaround is underway with the launch of electric vehicles. However, it has to reduce the complexity of its supply chain, a transition that won't be easy.