Ford Motor Co. said on Wednesday, while announcing the latest North American production cuts at seven assembly plants owing to a global chip shortage, that it would provide an update on April 28 to the expected hit to its 2021 profit.
The U.S.-based automaker previously said its operating profit this year would be reduced by US$1-billion to US$2.5-billion. The update to that forecast will be provided when Ford reports first-quarter results on April 28.
A Ford spokeswoman declined further comment on how the forecast would change, but the actions include shutting down for two weeks Ford’s Dearborn truck plant in Michigan, where it builds the top-selling F-150 full-size pickup. Ford and other automakers have repeatedly said they would prioritize the production of their highest-margin vehicles.
In addition to shutting the Dearborn plant for the weeks of April 5 and April 12, Ford said it is idling its Oakville, Ont., plant for three weeks, starting April 12. It will also idle the truck side of its Kansas City, Mo., plant the week of April 5, and shut its Louisville, Ky., assembly plant the weeks of April 12 and 19.
Ford also is cutting overtime shifts at plants in Dearborn, Kansas City, Chicago and Avon Lake, Ohio.
Ford has previously cut production of the F-150 and in some cases partly built and parked the vehicles for final assembly later when enough chips were in hand.
Industry officials told Reuters this week the chip shortage would worsen in the second quarter, and it was not clear if supplies would recover in the third quarter and whether automakers could make up all the lost production later this year.
“We are nowhere near out of the woods yet,” said John Bozzella, who heads a major auto trade group. “It’s unclear how much further it goes. Certainly the second quarter continues to be more challenging than the first, but we’ll have to see how things continue to play out.”
Research firm IHS Markit increased its estimate for lost production globally on Wednesday.
General Motors Co. previously said its 2021 profit could be shaved by up to US$2-billion because of the chip shortage.
Earlier on Wednesday, GM chief financial officer Paul Jacobson, speaking at a Bank of America conference, said he still felt comfortable with the company’s 2021 profit forecast despite the chip shortage. GM said in February that, including the chip hit, it expected to earn US$4.50 to US$5.25 a share this year.
The chip shortage comes after North American auto plants were shut for two months during the COVID-19 pandemic last year and chip orders were cancelled, and as demand surged from the consumer electronics industry as people worked from home and played video games. That has now left the auto industry competing for chips.
Semiconductors are used extensively in cars, including to monitor engine performance, manage steering or automatic windows, and in sensors used for parking and entertainment systems.
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