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Chip shortage to cut Ford's Q2 output by 50%

Apr 29, 2021 | 08:45 AM | Pittsburgh | Lisa Gordon

Tags  Ford Motor, semiconductor chip, No1 busheling, scrap price, automotive production

The semiconductor chip shortage is so severe that Ford Motor Co will lose half of its production target for the second quarter, the automaker told investors on Wednesday April 28.

Detroit-based Ford blamed a fire at a Japanese supplier in March for exacerbating the chip shortage that has plagued the company all year.

“Ford now expects to lose about 50% of its planned second-quarter production, up from 17% in the first quarter – again, implying that Q2 will be the trough of the issue,” the company said in its first-quarter earnings release.

On a positive note, the automaker forecast second-half production volumes will decline only 10%.

Ford chief financial officer John Lawler said in the release that he believes the issue will bottom out during the second quarter.

For the full year, Ford now expects to lose about 1.1 million units of production due to the semiconductor shortage.

Fewer vehicles coming off the assembly line has caused an extreme tightness in the prime scrap market, leading No1 busheling prices to exceed those for shredded scrap by $93 per gross ton on a cost-yield basis.  

Fastmarkets' monthly assessment of the steel scrap No1 busheling, consumer buying price, delivered mill Chicago was at $550 per ton on April 7. 

Ford's first-quarter net income was its best since 2011, at $3.26 billion on $36.23 billion in revenue.


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