Potential Engine Shortage?

[Bob Rosadini]

Ford faces parts shortages as virus impacts Mexico factories

 

Financial Times  /  July 10, 2020

Ford is facing potential parts shortages from suppliers in northern Mexico as the pandemic throttles production, threatening the ability of US factories to keep manufacturing vehicles.

 

The governor of the state of Chihuahua, an important region supplying the US automotive industry, has barred employers from operating with more than half their workforce in an attempt to control the spread of Covid-19.

 

“Due to COVID-19, the State of Chihuahua in Mexico has limited employee attendance to 50 per cent, a region in which we have several suppliers,” Kumar Galhotra, president of Ford’s Americas and International Markets Group, said in a statement. “With our US plants running at 100 per cent, that is not sustainable. While we do not expect any impact to production next week, we are continuing to work with government officials on ways to safely and constructively resume remaining production.”

 

Besides suppliers, Ford operates an engine plant in Chihuahua where 2,400 workers make engines for its larger F-series trucks and the Escape crossover utility vehicle.

 

Christopher Landau, the US ambassador to Mexico who has a reputation for speaking candidly, told an Atlantic Council webinar on Thursday that Ford was struggling to deal with capacity constraints at the engine plant.

 

“Last night at the dinner I was talking to one of the senior executives from the Ford Motor Company,” he said. “They were saying they are going to have to start shutting down their factories in the United States as of next week if they don’t get that rolling.”

 

The dinner he referred to was at the White House during Mexican president Andrés Manuel López Obrador’s visit to Washington.

 

Óscar Albín, president of the National Autoparts Industry, said that while he had not heard about Ford’s problem specifically, in Chihuahua, “many car parts are not being produced to the needs of the car factories in the US and Mexico. In June, production was sufficient because the car factories were not working at 100 per cent either, but in July the [car] factories are at 100 per cent”.

 

Asked if there could be shortages, Mr Albín added: “It’s not that there could be, there are. And not just Ford, all the factories in the US.”

 

Luis Carlos Ramirez, Chihuahua president of Index, which groups manufacture-for-export industries, said Ford had started at 30 per cent capacity at the start of June, when the automotive industry was designated essential.

 

At that time, under Mexico’s traffic light system which governs the gradual reopening of the economy according to the spread of the virus, Chihuahua was on red, but two weeks ago, it moved to amber and increased to 50 per cent.

 

“We hope we will soon change to yellow and be on 80 per cent,” Mr Ramirez said.

 

The only surprise in a carmaker experiencing supply chain problems in Mexico because of the pandemic was that it had not happened sooner, said Kristin Dziczek, vice-president of industry, labour and economics at the Center for Automotive Research in Michigan.

 

She said trouble at the Chihuahua engine plant would be particularly painful because while all vehicle sales are down — Ford’s US sales plunged 33 per cent in the second quarter — demand for trucks had been more resilient. Furthermore, trucks were more profitable.

 

So what engines are involved???

[FordBuyer]

Like us, Mexico has a terrible virus problem that is getting worse everyday. Only about 50% of workers are showing up at supplier plants in Mexico daily. One has to wonder how long plants will stay open here with hospitals jamming up with covid patients in many parts of the U.S. With no national leadership here, we are screwed until a leader manifests itself. Atlanta just went back to phase 1 and I expect the same in FL. Good luck to us all.

[akirby]

We tried to buy a small freezer and the upright models are sold out and back ordered for months.  The factory rep told our local store that they can’t get workers to come back to work because they’re making more with the enhanced unemployment checks.  

[fuzzymoomoo]

45 minutes ago, akirby said:

We tried to buy a small freezer and the upright models are sold out and back ordered for months.  The factory rep told our local store that they can’t get workers to come back to work because they’re making more with the enhanced unemployment checks.  

I get what they were trying to do with that extra $600 but I think it was a big mistake. Incentivizing people to stay at home is not the way to get money flowing through the economy. 

[Bob Rosadini]

41 minutes ago, akirby said:

We tried to buy a small freezer and the upright models are sold out and back ordered for months.  The factory rep told our local store that they can’t get workers to come back to work because they’re making more with the enhanced unemployment checks.  

Amen on that-brilliant move on the part of Washington.  Friend has (had???) a very successful restaurant.  His wait staff pulling in 900 a week.  Think any are anxious to come back to work?

 

Back to topic-what does Chihauhau make for engines?

[akirby]

29 minutes ago, fuzzymoomoo said:

I get what they were trying to do with that extra $600 but I think it was a big mistake. Incentivizing people to stay at home is not the way to get money flowing through the economy. 

Congressional democrats actually want to continue it through the end of the year claiming that people want to work and would not sit home if they were able to find work.  We all know that’s complete hogwash.  I know a LOT of people who would stay home and collect a check if possible.  My wife’s great aunt is perfectly capable of working but she lived on a $400 military widows pension for 25 years and now she gets social security.  We used to help her out but then we decided if that was her choice to be a bum and not work then we weren’t going to subsidize it.

[FordBuyer]

51 minutes ago, Bob Rosadini said:

Amen on that-brilliant move on the part of Washington.  Friend has (had???) a very successful restaurant.  His wait staff pulling in 900 a week.  Think any are anxious to come back to work?

 

Back to topic-what does Chihauhau make for engines?

 

The power stroke diesel for the F-Series Super Duty, Ford's most profitable vehicle. Very few robots at that plant since Mexican workers are low paid and thus Ford can hire lots of humans. Many are getting sick and others just fear coming to work and getting sick.

[akirby]

43 minutes ago, FordBuyer said:

Very few robots at that plant 

Citation?

[silvrsvt]

3 hours ago, akirby said:

We tried to buy a small freezer and the upright models are sold out and back ordered for months.  The factory rep told our local store that they can’t get workers to come back to work because they’re making more with the enhanced unemployment checks.  

 

2 hours ago, fuzzymoomoo said:

I get what they were trying to do with that extra $600 but I think it was a big mistake. Incentivizing people to stay at home is not the way to get money flowing through the economy. 

 

That benefit runs out on the 31st of this month. Plus I thought I saw if you got a recall notice to work, you couldn't claim unemployment after that..

[akirby]

1 minute ago, silvrsvt said:

That benefit runs out on the 31st of this month. Plus I thought I saw if you got a recall notice to work, you couldn't claim unemployment after that..

Theoretically but I don’t think they’re enforcing it.

[twintornados]

1 hour ago, akirby said:

Citation?

 

No...F-Series.....?

[fuzzymoomoo]

2 hours ago, akirby said:

Citation?

None of the engine plants have many robots, it's not unique to Mexico. 

[Bob Rosadini]

7 hours ago, FordBuyer said:

 

The power stroke diesel for the F-Series Super Duty, Ford's most profitable vehicle. Very few robots at that plant since Mexican workers are low paid and thus Ford can hire lots of humans. Many are getting sick and others just fear coming to work and getting sick.

Ouch!  I  forgot about that.  Wait!  "One Ford"!  one way to get the 9L Duratorque here for the F-850 tandem?

[FordBuyer]

4 hours ago, fuzzymoomoo said:

None of the engine plants have many robots, it's not unique to Mexico. 

 

Well, let's put it this way....since auto companies operating in Mexico pay so little for labor, they are used to using far more workers in the plants than in the states. So Mexican workers have very little social space so that the virus is more effective. Thus the 50% absentee rate. 

 

Just heard that GM is cutting a shift at Wentzville because of the virus and Arlington in trouble too. Luckily Ford plants in the states are in locations that are not completely out of control yet like Kentucky. But Mexico is a problem for everyone right now. 

[MKX1960]

6 hours ago, twintornados said:

 

No...F-Series.....?

You beat my to it.?

[jpd80]

49 minutes ago, FordBuyer said:

 

Well, let's put it this way....since auto companies operating in Mexico pay so little for labor, they are used to using far more workers in the plants than in the states. So Mexican workers have very little social space so that the virus is more effective. Thus the 50% absentee rate. 

I doubt that automakers use any more workers than they have to regardless of pay.

so maybe a similar number of Mexican workers on a shift  as a US engine plant.

 

This current problem is one of Ford's own making, maximizing profit on engines

but now facing nightmare supply problems. The fail here was Ford not bringing

engine production back to the US when it moved Super Duty out of Cuautitlan 

ten years ago......the threat to supply was something Ford chose to take to

make more money, so don't bitch about it now.

Edited July 12, 2020 by jpd80

[fuzzymoomoo]

1 hour ago, FordBuyer said:

 

Well, let's put it this way....since auto companies operating in Mexico pay so little for labor, they are used to using far more workers in the plants than in the states.

That is simply not true

[fuzzymoomoo]

1 hour ago, jpd80 said:

I doubt that automakers use any more workers than they have to regardless of pay.

so maybe a similar number of Mexican workers on a shift  as a US engine plant.

 

This current problem is one of Ford's own making, maximizing profit on engines

but now facing nightmare supply problems. The fail here was Ford not bringing

engine production back to the US when it moved Super Duty out of Cuautitlan 

ten years ago......the threat to supply was something Ford chose to take to

make more money, so don't bitch about it now.

At the time they really didn't have anywhere to move it to. Technically they do now but there's not much incentive to do so beyond the issue they’re facing now. 

[jpd80]

4 minutes ago, fuzzymoomoo said:

At the time they really didn't have anywhere to move it to. Technically they do now but there's not much incentive to do so beyond the issue they’re facing now. 

By 2010, Ford had closed down 14 plants in the US, they had room to add more American jobs.

I think it's good in the short term that they suffer some real hurt over this, it's the only way the 

suits learn.

 

[ice-capades]

7 hours ago, jpd80 said:

By 2010, Ford had closed down 14 plants in the US, they had room to add more American jobs.

I think it's good in the short term that they suffer some real hurt over this, it's the only way the 

suits learn.

 

 

I understand the point you're making but in hindsight, what incentive was there to move the engine production back to the States just because they moved Super Duty production?

[jpd80]

12 minutes ago, ice-capades said:

 

I understand the point you're making but in hindsight, what incentive was there to move the engine production back to the States just because they moved Super Duty production?

There was no incentive because Ford just assumed that no "external threat" would ever stop production.

How on earth is that effective threat management, even Windsor looks like a safer bet.

 

[mnm]

I haven’t a clue about how many workers are on a Mexican Ford engine assembly line. But for reference, the Ford engine plant I work in has about 160 direct labor employees on each of its two assembly lines. Still more humans than robots. For now?! 

[Bob Rosadini]

3 hours ago, ice-capades said:

 

I understand the point you're making but in hindsight, what incentive was there to move the engine production back to the States just because they moved Super Duty production?

Maybe logistics?  Assuming they had plant options-Cleveland? Windsor?  Moving those 6.7s from Mexico to Louisville and Avon Lake can't be cheap.

2 hours ago, jpd80 said:

There was no incentive because Ford just assumed that no "external threat" would ever stop production.

How on earth is that effective threat management, even Windsor looks like a safer bet.

 

I've always wondered when I would read news accounts of the violence in Mexico and the power of the cartels..."wow if I were a CEO, would I be thinking about a huge plant investment with that going on all  around me-also how difficult would it be to transfer management people into that environment?"  Some would say to that argument..."oh the cartel problem is isolated to only parts of the country"....Really?

Then again when you look at the lunatic fringe in our own country you could say.."What difference would it make?"?

 

[fuzzymoomoo]

28 minutes ago, Bob Rosadini said:

Maybe logistics?  Assuming they had plant options-Cleveland? Windsor?  Moving those 6.7s from Mexico to Louisville and Avon Lake can't be cheap.

I would think it would be cheaper to ship them from Dearborn, Romeo, Cleveland or Windsor to Louisville but I can't say for sure. Maybe the cost of moving the tooling is the biggest hang up? 
 

Of course we know now Romeo is closing soon, but I think there might still be space in Dearborn and Windsor for another line. I can't say for sure though. 

Edited July 12, 2020 by fuzzymoomoo

[lfeg]

20 hours ago, twintornados said:

 

No...F-Series.....?

Yes, a Citation with a 6.7 Powerstroke would be a sight to see.