Ford confirms it will stop all F-150 production after supplier fire – Detroit Free Press

Ford suspended all production Wednesday of its profit-driving F-150 pickup, the nation’s best-selling vehicle for more than 35 years, because of a “black swan” parts shortage. 
The production halt was caused by a fire May 2 at a parts factory in small-town Michigan that rippled through the North American auto industry but hit Ford hardest. Production at General Motors, Fiat Chrysler and Mercedes also was 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.”
Joe Hinrichs, Ford executive vice president and president of Global Operations, acknowledged in a briefing late Wednesday, “We have to rebuild the whole supply chain.”
F-150 trucks make up a multibillion-dollar brand 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 overall.  Nearly 900,000 were sold in 2017 at an average cost of $46,000. And January through April sales are up 4% from the same time last year. 
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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 the fire at Meridian Magnesium Products in Eaton Rapids, said Kelli Felker, Ford spokeswoman.
Late Wednesday, on the eve of the annual shareholder call, Hinrichs announced that the Dearborn Truck Plant would shut down at the end of the day’s second shift, affecting about 4,000 workers.
The F-150 is built only at the two sites. 
The length of the production halt has not been determined.
“The situation really is hour to hour,” Hinrichs said. “It’s safe to say we’re going to see an impact of several days.”
The supplier, Chinese-owned Meridian Magnesium Products, has not confirmed timelines. UAW officials have warned Ford workers to be prepared for layoffs.
“Ford has 100% of its truck radiator supports in North America coming out of the Eaton Rapids facility,” said Vadhavkar, who worked with Meridian Magnesium before retiring in September 2017 as Ford’s senior manager for stampings, structures and raw materials for supplier technical assistance in purchasing North America. 
“You don’t have multiple suppliers for a complicated part like this one. You have specialty manufacturers because it’s more efficient,” he said. “And you can’t just take molds for the casting and ship them to another plant or supplier overseas.”
Meridian is the No. 1 supplier in North America for the magnesium radiator support structure, the part that holds radiators on Ford 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 approximate density of water, it gets heavy. So the magnesium radiator support structure hangs on the vehicle providing support. 
Meridian Magnesium Products of America was acquired by Wanfeng Auto Holdings Group in 2013.
“This company is the only supplier in North America that has the ability to supply this product at the volume Ford requires,” Vadhavkar said.
Ford officials confirmed that Meridian produces the “front bolster,” which structurally reinforces the engine where the radiator is attached, for the F-150, Super Duty trucks, Expedition and Navigator. The supplier also makes a third-row seat cushion pan for the Ford Explorer, Ford Flex and the Lincoln MKT, and a lift gate for the MKT.
Meanwhile, Fiat Chrysler buys magnesium instrument panels from the supplier. The speedometer, glove box, steering column support, heating and air-conditioning systems all hang on the cross car beam known as the instrument panel, Vahavkar explained.
Sources in the auto industry said privately that factories could be down for “several weeks.” They’re concerned about causing alarm among investors and workers. 
Eaton Rapids Fire Chief Roger McNutt said Wednesday, “I would guess about three-quarters of the production area was affected. 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.
Ford has an 84-day supply of F-Series trucks, according to Erich Merkle, U.S. sales analyst for Ford.
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 their 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.
UAW workers who are displaced may file for unemployment and there’s supplemental pay that provides up to 95% of wages after a certain point, based on timelines and other factors.
Workers routinely navigate uneven production schedules and periodic shutdowns, but this current situation carries the potential for long-term impact, analysts say.
On a side note, the Kansas City plant also builds the Ford Transit with the help of about 3,400 workers. They have not been affected by the shutdown, Felker said.
Meanwhile, production of the Ford Super Duty trucks has stopped, but no layoffs have occurred, she confirmed. The Kentucky Truck Plant in Louisville and the Ohio Assembly Plant in Avon Lake, the only sites where Super Duty trucks are built, are not scheduled for shutdown. Felker said Ford has continued manufacturing Expeditions, Navigators and other large vehicles uninterrupted.
Hau Thai-Tang, executive vice president, product development and purchasing at Ford, called the current situation a “black swan event” and noted that the team has worked with the supplier to recover 19 tools required to manufacture needed materials.
“Meridian contacted us within five hours,” he said, so Ford could immediately assess structural damage and inspect tools and dies and “get them out of there as quickly as possible.”
Ford said Meridian is working to utilize its facility in Strathroy, Ontario.
Ford officials downplayed the potential impact on sales, saying vehicle supplies are fine and customers shouldn’t experience problems. 
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. FCA continues to work with the supplier’s team on recovery efforts.”
Windsor Assembly employs 6,100 workers on three shifts, according to a company fact sheet.
In addition to the Pacifica and Pacifica Hybrid, the plant produces the Dodge Grand Caravan. The Jeep Wrangler is not affected, Tinson confirmed.
GM temporarily halted production on Wednesday of its Chevrolet Express and GMC Savana full-size vans at its Wentzville, Mo., plant because of the supply chain constraint, said GM spokesman Nick Richards.
The plant will continue to produce the midsize Chevrolet Colorado and GMC Canyon without interruption, he said. The company is working to resume van production “as quickly as possible.”
Richard noted that GM does get parts from Meridian for other vehicles and has been able to identify alternative supplier sources in the short term.
Michelle Krebs, executive analyst for Autotrader, said no one knows how long the supplier will be crippled.
“In the last decade or so, automakers have gone to fewer suppliers to make more of the parts across more model lines,” she said. “It’s to simplify manufacturing by dealing with fewer suppliers. But when something like this happens, the effect is massive.”
Meridian, a leading supplier of die cast components, lists as clients on its website: Audi, BMW, Daimler, Fiat, Ford, GM, Tesla, Jaguar and Mercedes.
Mercedes-Benz in Tuscaloosa County, Ala., released a statement to local media noting part of the Vance plant was shut down and production shifts canceled for workers May 6 through Wednesday because of the Michigan fire “until an assessment and recovery plan is confirmed.” 
A spokesman for Mercedes, which uses magnesium for its vehicle cockpits, said the situation is unchanged and the company would have an update later this week or Monday. 
The Lansing State Journal reported that portions of the Meridian plant, which is located just south of Lansing and employs about 400 people, remain open. The fire and explosions damaged the main plant’s roof.
The blaze occurred about 1:30 a.m. and included a series of explosions.
Despite the damage at the 208,000-square-foot plant, some workers were told they could return to work that day, the State Journal reported. “The blaze apparently originated in an area of the plant called the ‘tunnel,’ where workers put magnesium scraps on a conveyor belt to be melted down.”
City officials are discussing setting up of a temporary food bank program in anticipation of a possible long-term shutdown.
Contact Phoebe Wall Howard: or 313-222-6512. Follow her on Twitter @phoebesaid.


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