Ford, Stellantis Announce Production Cuts Amid Chip Shortage

Ford, Stellantis Announce Production Cuts Amid Chip Shortage

Due to the global semiconductor shortage, Ford will reduce production at its Ohio plant. And competitor Stellantis’ production will be halted at its Warren, Michigan, and Saltillo, Mexico, assembly plants.

What Happened

Amid a global semiconductor shortage, Ford Motor Company (F) said it would cut more production in the U.S. It will cut production at a plant in Ohio, and its Kentucky Truck Plant in Louisville will only have two shifts. According to Reuters, Ford will assemble the F-150 pickup and Edge SUVs in North America and wait for more semiconductors to complete the production. It may take several weeks to complete the process. 

Similarly, the world’s fourth-largest automaker Stellantis said it would hold the final production process of its popular Ram 1500 Classic trucks at the Warren, Michigan, and Saltillo, Mexico, assembly plants. After more semiconductor chips become available, the trucks will be completed and be distributed. 

Stellantis has not confirmed when normal production will resume, as the deadlock could last for a “number of weeks.” Stellantis, a merger between Fiat Chrysler Automobiles NV (FCAU) and PSA Group, officially took shape in January. Ever since, it has seen a shortage of chips hampering its production and overall business. 

Why It Matters

Earlier in February, Ford temporarily cut production at two of its plants in the U.S. because of the semiconductor shortage. The plants produce F-150 full-size pickups. Ford and Nissan Motor (NSANY) also in January cut production at plants in the U.S. and Japan.

In 2020, demand for vehicles increased following production shutdowns due to the COVID-19 pandemic. At the same time, demand for laptops and gaming systems increased, and global chipmakers saw a rise in orders.

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