A global semiconductor shortage is expected to slash Ford Motor Co.’s vehicle output by up to 20% in the first quarter of this year, illustrating how deeply the fallout from the computer-chip crunch has hit the car business.

Ford said Thursday it plans to cut production of its F-150 pickup truck—the nation’s top-selling vehicle and the company’s biggest moneymaker—because of the shortage, a day after confirming a hit to output of several sport-utility vehicles. Losses of vehicle production globally in the first and second quarters could trim $1 billion to $2.5 billion from its pretax bottom line this year, executives warned while discussing fourth-quarter earnings. These latest actions mark a significant escalation in the chip-shortage problem that has disrupted the auto sector and other industries in recent weeks.

Most major auto makers have been forced to curtail at least some factory output; meanwhile, makers of consumer electronics have had to deal with limited supplies for their devices. The shortages come as manufacturers work to rebound from shutdowns last spring while demand rises with increased use of technology during the pandemic.

On Wednesday, General Motors Co. reported its first hit from the chip shortage with plans to pause production for one week at three North American factories that mostly make compact sport-utility vehicles. The Detroit auto maker has been working to stay ahead of the problem for a few months, asking its suppliers before the holidays to stockpile chips. But the hit to F-150 output underscores the potential severity of the chip shortfall.

The truck is the source of most of Ford’s global profit. The disruption also comes as Ford has been trying to crank up production of a long-awaited design of the truck, a rollout that company executives have stressed is key to lifting profitability.

Ford said Thursday it will cut F-150 production at a Detroit-area factory next week to just one eight-hour shift, from three shifts. Its other F-150 plant, in Kansas City, Mo., will run two of its three shifts next week, with both factories returning to their normal round-the-clock schedules on Feb. 15, Ford said.

Todd Horwitz Chief Strategist BubbaTrading.com
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