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Light at the end of the chip shortage.....hope this is true....

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8 hours ago, John Hopkinson said:

Hope so because I’m staring at barrel of 1 month more off at OAC after next week. We’re getting hammered along with every other plant. Louisville and OAC are getting hit the hardest. 

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Yes for the sake of the people who's jobs and lives are being affected by this I hope for a speedy resolution.  Kinda of puts things into perspective, most are only concerned where their trucks are at and not even thinking about the stress the workers are going though.  Hang in there.

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I took a Covid Early Retirement from a major airline. Have a good idea what they're going though and no it's not a lot of fun. 

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Ford seemed to get most of its chips from plant in Japan that burned down. That plant will reportedly be back on line in July. 

 

Ford is also going to redesign its components to accept chips from many different suppliers so that one plant going down doesn't screw them.

 

Meanwhile, the crisis is still getting worse and doesn't look good for rest of year even if more chips are on horizon. It will take many months to rebuild inventories.

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15 minutes ago, FordBuyer said:

Ford is also going to redesign its components to accept chips from many different suppliers so that one plant going down doesn't screw them.

 

If it's true they were tied to one supplier then that's piss poor planning and a catastrophe waiting to happen.

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I think there's a lot of PR spin going on to make people think the chip shortage will be solved in the next few months. I'll believe it when I see it but think the shortage will continue to interrupt vehicle production through the end of the year. In addition, I think a lot of the PR spin is to help appease Dealer concerns about the worsening inventory problem. 

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32 minutes ago, ice-capades said:

I think there's a lot of PR spin going on to make people think the chip shortage will be solved in the next few months. I'll believe it when I see it but think the shortage will continue to interrupt vehicle production through the end of the year. In addition, I think a lot of the PR spin is to help appease Dealer concerns about the worsening inventory problem. 

 

With LAP closing for 6 weeks or more. I think you are correct. That closing alone pretty much ends Escape/Corsair 2021 MY and makes more delays for the plugins. Escspe and Corsair are the sweet spot segment and now dealers will be running out soon.

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7 hours ago, FordBuyer said:

Ford seemed to get most of its chips from plant in Japan that burned down. That plant will reportedly be back on line in July. 

 

Ford is also going to redesign its components to accept chips from many different suppliers so that one plant going down doesn't screw them.

 

Meanwhile, the crisis is still getting worse and doesn't look good for rest of year even if more chips are on horizon. It will take many months to rebuild inventories.

Hoped we had learned that lesson after the Xiralic outage in 2011 after the earthquake and tsunami in Japan. Much easier to substitute a color than electronic components. Some "lean manufacturing" and quality principles advocate reducing number of suppliers. Sometimes accidents happen, but this year has been a Series of Unfortunate Events. The loss of lives and serious illnesses of far greater cost. From a business standpoint, backup and recovery should have been considered. 

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The sad fact is Inventory will not be back normal until fall of 2022. If you’re going to need a car from any manufacturer get in there 4-6 months before you need it. The days of just browsing a dealer lot and saying I’ll take the red one are far in the future. 

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11 hours ago, akirby said:

 

If it's true they were tied to one supplier then that's piss poor planning and a catastrophe waiting to happen.

Yes, but the volumes may not have justified the additional cost of multiple sources.  I’m sure it looked very good until the plant fire.  What I’m wondering is how long it will take Ford to integrate multiple chips and modules to reduce cost.  On the Mach-e tear down there was an interesting comparison on the number of chips in it vs a Tesla.

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10 hours ago, FordBuyer said:

 

With LAP closing for 6 weeks or more. I think you are correct. That closing alone pretty much ends Escape/Corsair 2021 MY and makes more delays for the plugins. Escspe and Corsair are the sweet spot segment and now dealers will be running out soon.

Escape has always been a volume seller at my dealership. We currently have two. An S and a Titanium Elite.

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Posted (edited)
On 5/21/2021 at 1:57 AM, akirby said:

 

If it's true they were tied to one supplier then that's piss poor planning and a catastrophe waiting to happen.

To Ford, a critical path item like a computer chip is just another widget.

Completely oblivious to parts suppliers that can cripple its business.

 

Like every other CEO before him, Jim Hackett and Farley  failed to act on the problem of poor risk management. A corporate like Ford has to go through pain and suffering before the dimmest light bulb goes off that maybe there’s a problem with the way they do business..... very slow learners.

Edited by jpd80

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Part of the problem is not many companies make the needed chips.  There was a very informative 60 minutes about the chip problems and none being made in America that can be used in cars for the most part.  Intel for instance who makes 25% of the Chips being sold in America lacks the ability to make them.  They are dumping money in R&D and think they can catch up but they are are least 2 years behind.  The current company Ford uses from Taiwan is actually building a facility in Arizona, but the concern is if China takes over Taiwan the US could be in a world of hurt for chips.  At this point it's becoming a national security concern.

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It all comes down to cost reductions.  Automobiles are generally low margin...10% or less.  Manufacturers look for any way they can to save a few cents on each unit.  Outsourcing parts to the lowest bidder without any concern for second sourcing or keeping parts local should not be a surprise.  Throw in a fire at a major supplier and you have a recipe for trouble.

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18 hours ago, slemke said:

It all comes down to cost reductions.  Automobiles are generally low margin...10% or less.  Manufacturers look for any way they can to save a few cents on each unit.  Outsourcing parts to the lowest bidder without any concern for second sourcing or keeping parts local should not be a surprise.  Throw in a fire at a major supplier and you have a recipe for trouble.

Corporations are also supposed to identify all risks to their business and put in place mitigating strategies

to control as much as possible internal and external threats to the viability and profitability.

 

Not having contingencies for threats to just in time parts sourcing is crazy and indefensible,

this is why I believe that Ford is out of balance wit cost savings prioritised over real threats to 

the business, they bet the farm with no safety net, so now they’re shut down for weeks and even

with returned supply, a bout a year to fully recover. Actions have consequences.........

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36 minutes ago, jpd80 said:

Corporations are also supposed to identify all risks to their business and put in place mitigating strategies

to control as much as possible internal and external threats to the viability and profitability.

 

Not having contingencies for threats to just in time parts sourcing is crazy and indefensible,

this is why I believe that Ford is out of balance wit cost savings prioritised over real threats to 

the business, they bet the farm with no safety net, so now they’re shut down for weeks and even

with returned supply, a bout a year to fully recover. Actions have consequences.........

While I agree a better plan should have been in place, not sure how many had "Global Pandemic" and "Major Supplier Fire" on their Game of Life board. 

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Posted (edited)
1 hour ago, paintguy said:

While I agree a better plan should have been in place, not sure how many had "Global Pandemic" and "Major Supplier Fire" on their Game of Life board. 

How many one off events have to happen before a corporate recognises it’s exposure with critical parts supply.

Toyota was hit a while back and actually did something ( up to four months supply of chips)

 

Every time something bad happens we see how exposed Ford and the other manufacturers really are.

I guess it takes being burned a few times before they learn.

Edited by jpd80

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14 hours ago, jpd80 said:

How many one off events have to happen before a corporate recognises it’s exposure with critical parts supply.

Toyota was hit a while back and actually did something ( up to four months supply of chips)

 

Every time something bad happens we see how exposed Ford and the other manufacturers really are.

I guess it takes being burned a few times before they learn.

 

The problem is they get burned in different ways. You can't always see the unforeseeable.

 

The best they can do is to have multiple suppliers from different parts of the world ready to supply the same part without increasing their initial overhead (development and plant costs) that it doesn't hurt you too much at the initial for something that might happen. 

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Corporate mentality won't be concerning themselves with future safety nets, they are too short termed money hungry.

IMO they will allocate the scarce components to more profitable and better-selling vehicles at the expense of other models,

building vehicles with less technology, leave navigation systems out, remove "intelligent" rearview mirror that monitors for blind spots, remove digital speedo replace with old analog gauges, etc etc.

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Posted (edited)
3 hours ago, MKII said:

Corporate mentality won't be concerning themselves with future safety nets, they are too short termed money hungry.

IMO they will allocate the scarce components to more profitable and better-selling vehicles at the expense of other models,

building vehicles with less technology, leave navigation systems out, remove "intelligent" rearview mirror that monitors for blind spots, remove digital speedo replace with old analog gauges, etc etc.

In the first month or so that may have been true but now national F150 dealer stock is down to just 20,000 odd and around 70% are either base XL or XLT versions, Lariats and higher trims are getting scarce.

 

 

Edited by jpd80

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The question is how much are they actually losing vs what it would cost to mitigate such a low probability event.  Since they’re still building the more profitable vehicles with few to no incentives it might not be as bad financially as we think.  We’ll have to wait and see.

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8 hours ago, akirby said:

The question is how much are they actually losing vs what it would cost to mitigate such a low probability event.  Since they’re still building the more profitable vehicles with few to no incentives it might not be as bad financially as we think.  We’ll have to wait and see.

 

Well, Ford production was down 17% 1st quarter and profit was $3.5 billion with profit margin of 14%. Not too shabby. Now with so few new vehicles available, who needs incentives. Mullinax is down to 70 F150s, and that covers about 5 Mullinax dealers throughout FL. 

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12 hours ago, akirby said:

The question is how much are they actually losing vs what it would cost to mitigate such a low probability event.  Since they’re still building the more profitable vehicles with few to no incentives it might not be as bad financially as we think.  We’ll have to wait and see.

One positive is that by emptying out inventory, it means that the next twelve months, all plants can go gangbusters building as much product as possible and nearly all of it will be pre-sold, so not not much sitting in a holding yard.

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