Ford to halt all F-150 production, could last weeks

Phoebe Wall Howard | USA TODAY

Show Caption Hide Caption Ford suspends production of F-150 trucks Ford has temporarily stopped producing its F-150 trucks because it run out of parts after a fire at a key parts supplier for the best-selling vehicle in the U.S. Aleksandra Michalska reports.

DETROIT -- Ford Motor said it would suspend production Wednesday evening of its profit-driving F-150 pickup at its big plant in Dearborn, Mich., bringing to a temporary halt all production of the nation's bestselling vehicle.

The move was the result of a fire at a parts supplier in small-town Michigan that shook the North American auto industry. Production at General Motors, Fiat Chrysler and Mercedes also is disrupted.

"The impact on everybody else is going to pale compared to Ford," said Abhay "Abe" Vadhavkar, director of manufacturing, engineering and technology at the Center for Automotive Research in Ann Arbor. "For Ford, this is potentially enormous. It's just tragic."

Sources in the auto industry say privately they expect the factories will be closed for "several weeks." They're concerned about causing alarm among investors and workers.

Why Ford pickups matter

F-150 trucks are a multibillion-dollar enterprise that drives profits for the Dearborn-based automaker. An analyst recently calculated that the enterprise value of the F-Series trucks is greater than that of Ford as a whole. Nearly 900,000 were sold in 2017 at an average cost of $46,700. And sales are up 4% from last April.

This week, the truck side of the Ford Kansas City Assembly Plant in Missouri shut down and about 3,400 workers went home because of the parts shortage caused by a May 2 fire at Meridian Magnesium Products in Eaton Rapids, Mich., said Kelli Felker, Ford spokeswoman.

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The Dearborn shutdown will affect another 4,000 workers.

The F-150, America's top-selling vehicle, is built only at the two sites. No date has been set for reopening the Kansas City plant.

“This is a fluid situation, but we are working closely with our supplier and UAW partners to do everything we can to limit the impact on our production,” Joe Hinrichs, executive vice president and president of global operations, said in a statement Wednesday. “It’s a full team effort and we’re confident that any impacts will be short term.”

Ample supply

Ford has an 84-day supply of F-Series trucks, according to Erich Merkle, US sales analyst for Ford.

Ford stock began dropping Wednesday with news of a supply problem, the length of which has not been determined by automakers. The supplier, Meridian Magnesium Products, has not confirmed timelines.

Ford probably "has 50% of its product" coming out coming out of the plant that burned, which makes radiator supports, said Vadhavkar, who worked with Meridian Magnesium as Ford's senior manager for stampings, structures and raw materials for supplier technical assistance in purchasing North America.

Meridian Magnesium Products, based in Plymouth, Mich., is commonly known as Meridian Lightweight Technologies, which is based in Strathroy, Ontario. The global company was acquired by the Chinese Wanfeng Auto Holdings Group in 2013.

Meridian is the No. 1 supplier in North America for the magnesium radiator support structure, the material that holds radiators on trucks. Magnesium is a light metal that adds little weight and helps with fuel efficiency. When the radiator is filled with coolant, which has the density of water, it gets heavy. So the magnesium radiator support structure hangs on the vehicle providing support.

Other automakers affected

"This company is the only supplier in North America that has the ability to supply this product at the volume Ford requires," Vadhavkar said.

Meanwhile, Fiat Chrysler buys magnesium instrument panels from the supplier. The speedometer, glove box, steering column support, heating and air-conditioning systems, Vahavkar explained.

Fire Chief Roger McNutt in Eaton Rapids, Mich., where the fire occurred, said Wednesday said the fire claimed a huge area of production.

"I would guess about three-quarters of the production area was affected," he said. "They're in there trying to clean that up and get that going again. They plan on being up and running within a couple weeks."

Meridian officials couldn't be reached for comment.

Already, the automaker has sold 287,295 F-Series trucks this year.

"When you have a vehicle that comprises a quarter of your company’s sales, any production disruption is going to cause some consternation," said Ivan Drury, Edmunds senior manager of industry analysis. "This demonstrates the riskier side of Ford’s strategy to put all its eggs in the trucks and SUVs basket — when you’re more dependent on only a few models to drive sales, the company’s bottom line is much more sensitive to these kinds of unplanned setbacks."

Meridian had a small fire at the plant a year or so ago, but it was contained to one of its molding or casting machines, Vadhavkar said. Magnesium is pressure-fed into a cast and then rapid cooled, sort of like making Jell-O.

The material is essential for Ford trucks.

In April alone, Ford built 29,572 trucks in Kansas City and 31,482 trucks in Dearborn.

The fire also affected production of the Fiat Chrysler Automobiles plant in Windsor, Ontario, that produces the Chrysler Pacifica minivan.

Fiat Chrysler spokeswoman Jodi Tinson said, "The company is adjusting production schedules as needed to minimize plant downtime, but will make up any lost production."