Jannah Theme License is not validated, Go to the theme options page to validate the license, You need a single license for each domain name.
News

Here’s Why Both Ford and GM Have Shut Down Pickup Production

JEFF KOWALSKYGetty Images

  • With high inventory and stable demand, GM is shutting down one of its pickup truck plants to prevent overproduction.
  • Ford has voluntarily stopped assembly of its EV pickup, the F-150 Lightning, following a random vehicle fire at its production facility in Michigan.
  • Do these shutdowns spell trouble for both manufacturers? Experts say it depends.

    After years of delayed deliveries, material shortages, and scrawny dealership lots, the news that General Motors and Ford are both temporarily shutting down entire production plants is, well, worrisome, and not only because the pickup truck and SUV segments make up around 75% of annual sales in the US.

    One of these plant shutdowns is voluntary and even complies with the United Auto Workers bargaining agreement, while the other is a swift response to a vehicle fire with an impending production change.

    GM’s Fort Wayne, Indiana, plant produces the Chevrolet Silverado and the GMC Sierra.

    Joshua LottGetty Images

    GM announced its two-week shutdown of the Fort Wayne, Indiana, pickup truck plant, starting on March 27. The internal move was a result of increased production during a time of steadying demand, according to an employee memo obtained by The Detroit News. GM’s full-size truck plants in Michigan, Canada, and Mexico will continue to produce trucks during this time, and the company plans to proactively manage inventory throughout the year, according GM spokesperson Dan Flores.

    This stoppage is actually in line with previous statements from GM CFO Paul Jacobson, who said the company aims to have about 50 to 60 days’ inventory through 2023. As compared to pre-pandemic times, that is down around 30 days’ of inventory, though Jacobson said current levels of demand don’t necessitate pre-pandemic production levels.


    ford announces plans for new electric vehicle battery plant

    Ford CEO Jim Farley with an F-150 Lightning at the Contemporary Amperex Technology battery facility announcement.

    Bill PuglianoGetty Images

    On the other hand, Ford has been struggling with quality control this past year, as CEO Jim Farley has admitted. And its F-150 Lightning pickup is experiencing growing pains of its own. About three weeks ago, a fire broke out in a holding lot near the Rouge Electric Vehicle Center in Dearborn, Michigan, and Ford confirmed the fire originated from a pre-delivery Lightning model and spread to an additional Lightning truck before being extinguished. Ford has declined to give details about how or why the fire broke out, though it has had no customer complaints of fire and claims the root problem has been identified.

    The fire meant Ford had to halt production of its electric pickup through at least this week. However, the company said its joint-venture battery supplier, SK, is back to producing cells at its Georgia facility, and that it expects a smooth but slow return to production.

    This event shouldn’t necessarily stoke your fears about electric cars. Analysis of NTSB data and insurance claims shows that battery-electric vehicles are only responsible for 25 fires per 100,000 sales, as compared to 1530 fires per 100,000 internal-combustion vehicles. Still, fires from EVs are often more difficult to extinguish thanks to the burning temperature of lithium-ion batteries.

    While Ford grapples with a potentially costly return to production, GM’s shutdown may actually pay off over time, according to Cox Automotive Executive Analyst Michelle Krebs. She said maintaining profitability is GM’s main focus, and that shutting down a plant is a highly strategic move to keep profits rolling in.


    general motors ceo mary barra gives business update at fort wayne assembly plant

    Pickup trucks are popular and relatively expensive, meaning GM would rather shut down production than offer discounts or incentives on excess inventory.

    Joshua LottGetty Images

    “That means keeping prices up by not flooding the market with product and then discounting. Less discounting also means better residual values,” Krebs said in an email to Autoweek. “In contrast, Stellantis has high inventory but seems to be focused on incentives to go after volume and market share.”

    However, GM is not the only domestic manufacturer capable of doing limited-production shutdowns, Krebs said. Ford and Stellantis are both carrying extra inventory (around 80 to 130 days’ supply) and could very well cut production or offer buyer incentives to keep from over-producing. By comparison, foreign manufacturers like Toyota, Honda, and Kia are struggling to keep more than 30 days’ supply.

    JEFF KOWALSKYGetty Images

    Following the Great Recession, automakers were diligent about keeping production in line with demand, though not to the same degree seen as a result of modern material shortages, Krebs said. The simultaneous elimination of the infamous JOBS program negotiated by the UAW also played a significant role in the tendency for automakers to idle factories at the time.

    “That program had required automakers put employees who would have been laid off into a program where they still got full pay,” Krebs said. “Eliminating that program gave the domestic automakers more flexibility to idle plants when inventory was high or for whatever reason.”

    Ultimately, both of these shutdowns are temporary, and truck production will continue in Michigan and Indiana. However, both shutdowns signal the continued turmoil of the automotive industry, as OEMs struggle to regain footing in a new and abnormal market.

    With ample inventory, GM might just coast through Q1 of this year, as it refocuses on selling existing units and maintaining profitability. Ford, however, is stuck addressing the kind of quality control problems that plagued it last year, though the announcement of an additional battery facility in conjunction with Contemporary Amperex Technology could create further redundancy in its EV program.

    Have inventory shortages impacted your car shopping? Please share your experiences below.

    Read the full article here

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    Back to top button