The Novelis aluminium plant in Oswego, New-York was damaged by fire on September 16.
This company supplies much of the aluminium used in F-150 pickups, including the Lightning.
Ford’s earnings are expected to take a hit of up to $1 billion because of this.
Ford will temporarily suspend production of the electric F-150 Lightning due to a fire which has affected its supply of aluminium.
On September 16th, a fire severely damaged the Novelis aluminium plant in Oswego, New-York, which is one of Ford’s most important suppliers of this metal.
Since the F-150 line of pickups has made extensive use of aluminium in its body construction for over a decade, this is a major problem for the automaker, which will have to adjust both its production rate and its supply chain until Novelis can get back up to speed, which is not expected to happen before the first quarter of next year.
This is why Ford will pause production of its F-150 Lightning pickup at the Rouge Electric Vehicle Center in Dearborn, Michigan next week, as was revealed in a memo addressed to the plant’s employees.
The company will therefore be able to use more of its reduced aluminium supply on gasoline-powered F-150s, which make up the bulk of its sales in North America.
Ford says it is working closely with Novelis and its other aluminium suppliers to alleviate any possible shortages until full production at the Oswego plant returns.
Nevertheless, this fire is expected to have a large impact on the automaker’s finances, as Evercore ISI analysts believe Ford’s earnings will be $500 million to $1 billion lower than they would have been otherwise.
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More concretely, Ford’s shares dropped 6% on October 7th when the full impact of the fire on its operations became known, and another 1,4% further the next afternoon.
Other automakers, such as Stellantis and Toyota are also likely to be impacted, but since aluminium doesn’t play such a key part in their most popular models as it does in Ford’s F-150, the effects on their production schedules and financial reports are expected to be minor.
This unexpected supply issue for Ford joins existing challenges such as steel and aluminium tariffs that have boosted production costs as well as a shaky supplier base which is still recovering from the effects of the pandemic.
Source: Automotive News
