DETROIT (Reuters) – Ford Motor Co (F.N) is working with a key supplier to shift some parts production from Michigan to Ontario, Canada, after a fire and subsequent parts shortages forced the automaker to halt manufacturing of its highly profitable full-size pickups, according to sources familiar with the companies’ plans.
The Ford logo is seen at the New York Auto Show in the Manhattan borough of New York City, New York, U.S., March 29, 2018. REUTERS/Shannon Stapleton
The supplier, Chinese-owned Meridian Magnesium Products, said it is “working with the customers” – automakers affected by the fire – to move some of its tooling to a plant in Strathroy, Ontario, in a letter on an internal employee website and signed by George Asher, manager of Meridian’s Eaton Rapids plant in Michigan.
The fire, whose cause is under investigation by local authorities, triggered smaller production disruptions to other vehicle manufacturers, including General Motors Co (GM.N), Fiat Chrysler Automobiles (FCHA.MI), Daimler AG (DAIGn.DE) and BMW AG (BMWG.DE), the companies confirmed to Reuters on Wednesday.
But the most significant impact was felt by Ford, whose F-150 full-size pickup is the best-selling vehicle in the United States. The vehicle generated $41 billion in revenue last year, about 28 percent of total sales and the lion’s share of its profits.
Meridian supplies a lightweight radiator support for the F-150 and its heavy-duty sibling, the Super Duty. After the fire, Ford was forced to close F-series truck plants in Kansas City, Missouri, and Louisville, Kentucky, and was considering whether to close a third plant in Dearborn, Michigan.
It was not clear how long the production disruptions will last or how Ford may be assisting Meridian in relocating parts production. A Ford spokeswoman said on Wednesday the automaker is working closely with the supplier to get production restarted, but declined to provide details. Ford shares dropped 2.1 percent.
Production of the Super Duty at Ford’s Kentucky truck plant was halted on Wednesday.
The Super Duty is one of the automaker’s most profitable vehicles. A two-week production halt for the F-series could slice as much as $310 million from Ford’s second-quarter profits, Buck Research analyst Joseph Amaturo wrote in a note Wednesday.
Ford could make up some of the lost production later in the year by running overtime.
Fiat Chrysler said on Wednesday the fire affected production of the Chrysler Pacifica minivan in Windsor, Ontario, adding it is “adjusting production schedules as needed to minimize plant downtime (and) will make up any lost production.”
GM said on Wednesday it has temporarily halted production of Chevrolet Express and GMC Savana full-size vans at its Wentzville, Missouri, plant because of parts shortages caused by the fire on May 2. The plant continued to produce Chevrolet Colorado and GMC Canyon mid-size pickups. GM said it is working to resume van production “as quickly as possible.” GM shares were off 0.8 percent.
Daimler and BMW acknowledged that they also had parts shortages from Meridian, resulting in minor production disruptions at their U.S. plants in Alabama and South Carolina.
Meridian, owned by Chinese supplier Wanfeng Auto Holding Group [WFAHG.UL], also provides parts to Toyota Motor Corp (7203.T) and Tesla Inc (TSLA.O) among others, according to the websites of Meridian and Wanfeng.
Meridian could not be reached for comment.
Reporting by Joseph White and Paul Lienert in Detroit; Editing by Chizu Nomiyama and Jeffrey Benkoe