DEARBORN, Mich.—Ford Motor Co. said production of F-150 and Super Duty pickups—its most profitable vehicles—at multiple U.S. factories will temporarily be halted because of a fire at a supplier plant near Lansing that produces parts for the trucks.
General Motors Co., Fiat Chrysler Automobiles and Mercedes-Benz also said output has been disrupted.
Ford, on May 7, idled F-150 production at its plant in Kansas City, Mo., until May 14, temporarily laying off 3,600 workers. It was also to suspend production at its Dearborn Truck Plant on May 9 through at least the end of the week, affecting about 4,000 workers.
Meridian Magnesium plans to rebuild
Meridian Magnesium Products of America intends to have its entire complex rebuilt and reopened in four months, Eaton Rapids Fire Chief Roger McNutt told the Lansing State Journal.
The north end of Meridian Magnesium's main plant caught fire about 1:30 a.m. May 2 and its roof was destroyed by a series of explosions.
The cause is still unclear, McNutt said. He hopes local fire officials can enter the area where he suspects the fire started within a few days. McNutt said Meridian Magnesium recently hired a crew of about 300 people to remove charred debris from the north end of the main plant.
Plants 4 and 5 within Meridian Magnesium's complex at 2001 Industrial Drive are open and have employees working inside them, McNutt said, and the southwest end of the main plant reopened Tuesday.
According to a letter shared with Dearborn Truck workers Wednesday afternoon, officials expect the plant to resume production on May 14, although the letter cautioned that "this situation and circumstances can change."
Ford Super Duty production has been halted at Kentucky, although that plant continues to produce other vehicles and no workers have been laid off. Super Duty output will continue at Ford's plant in Avon Lake, Ohio.
The parts plant in Eaton Rapids, owned by Meridian Magnesium Products of America, supplies three different components for Ford vehicles: a front bolster used in the F-150, Super Duty, Expedition and Navigator; a third row seat cushion pan used in the Explorer, Flex and MKT; and a liftgate inner used in the MKT.
Production of the Explorer, Flex, MKT, Expedition and Navigator is not expected to be halted, Ford said.
Meridian makes aluminum and magnesium structural components at four plants in North America. Auto makers use magnesium parts to cut weight in vehicles, and improve fuel economy.
In Eaton Rapids, Meridian produces numerous lightweight parts, such as engine cradles, front-end carriers, instrument panel crossbar beams, liftgate inner structures and radiator supports. Ford said it relies on less than one-third of the parts output produced at the Meridian plant.
"This is a fluid situation, but we are working closely with our supplier and UAW partners to do everything we can to limit the impact on our production," Joe Hinrichs, executive vice president and president of Ford global operations, said in a statement. "It's a full team effort and we're confident that any impacts will be short term. The good news is we have strong inventories of our best-selling F-series pickups and other vehicles, and customers won't have a problem finding the model they want."
Ford said the disruption would have an "adverse impact" on its financial results that will be contained to the second quarter, but the company left its earnings guidance unchanged for the full year. Hinrichs declined to provide specifics on the second quarter impact.
The shutdowns could cost Ford as much as 15,000 trucks per week, according to James Albertine, an analyst with Consumer Edge Research.
F-Series pickups generate most of Ford's profits and Morgan Stanley recently estimated the value of the franchise as greater than that of the entire company. The truck line, including F-250 and other larger models, hauls in about $40 billion in annual revenue, exceeding the annual sales of companies such as Facebook Inc. and Nike Inc.
The F-150 is so important to Ford that Albertine wrote that he is considering adjusting his earnings projections for the auto maker once the full-impact of the supplier fire is known.
"We do expect Ford will incur higher production costs during this shutdown period and potentially in the period immediately following the shutdown to the degree Ford elects to accelerate production to make up for this shortfall," Albertine wrote in a note to investors.
At the end of April, Ford had an 84-days supply of F-Series pickups, according to AutoData. Even with heavy demand, the production stoppage would likely have to last for multiple weeks to dent those numbers.
F-Series sales in the U.S. rose 4.1 percent to 287,295 through April, according to the Automotive News Data Center.
"It's a bit early to determine the impact this will have on Ford's sales, but on average it takes 76 days for an F-150 to sell, so the company does have a bit of a cushion," Ivan Drury, Edmunds senior manager of industry analysis, said in a statement. "But when you have a vehicle that comprises a quarter of your company's sales, any production disruption is going to cause some consternation. 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."
Hau Thai-Tang, Ford's head of product development and purchasing, said the automaker was the first company on site at the parts plant after the fire and was able to recover 19 sets of production dies over a 48-hour period. The dies were all undamaged and can be reused. Ford is working with Meridian to find alternative sites to install the machines, including a factory in Ontario.
At least four other auto makers are affected by the parts shortage.
General Motors said May 9 it will temporarily halt production of Chevrolet Express and GMC Savana full-size vans at its Wentzville Assembly plant in Missouri because of a parts shortage resulting from the fire. It said the plant will continue building the Chevy Colorado and GMC Canyon midsize pickups.GM did not identify the specific part or how long van production will be idled.
Also on May 9, FCA said the fire has affected output of the Chrysler Pacifica minivan in Windsor, adding it is "adjusting production schedules as needed to minimize plant downtime (and) will make up any lost production." The specific part was not indentified.
Mercedes-Benz U.S. International Inc., in a statement released from its plant in Vance, Ala., said: "The damage caused at Meridian has caused a shortage of components used in our cockpits for some of our vehicles built at MBUSI. As a result, we have canceled production shifts in certain areas and adjusted production hours for our team members this week. We continue to assess the situation and are working with Meridian to restore normal production levels."
Mercedes assembles the C class, GL, GLS, GLE and GLE Coupe at the Alabama plant. Meridian supplies a crossbar beam to Mercedes that holds the dashboard in the SUVs.
BMW of North America said May 9 production of the X6 and X5 crossovers has been interrupted in Spartanburg, S.C., because of the parts shortage stemming from the supplier fire.
"BMW is working to develop alternative sources for the parts," the auto maker said in an e-mailed statement to Automotive News. "The BMW plant in South Carolina has an inventory of parts on hand but until the supply chain stabilizes there will be some interruptions to X5 and X6 production. Production of the X3 and X4 models is not affected."
The specific part supplied to BMW was not identified.
Getting back online
The cause of the fire has not been determined.
Meridian, in a statement released May 9, said the local fire marshal has been able to access the plant and the investigation continues.
"We are currently following our safety protocols and working alongside state agencies and utilities to ensure that resumption of operations will be done in safe manner. Clean up and repairs are progressing," the statement said.
"Finally, we are working with all of our customers to resume operations and supply as soon as possible. Safety will always be our primary concern. We will provide further information as soon as we are able."
Meridian, in a previous statement, said it is working with its customers to move dies to its plants in Strathroy, Ontario, and the United Kingdom, Asher wrote, though the letter did not disclose the names of the customers.
Meridian is owned by Chinese supplier Wanfeng Auto Holding Group. It also provides parts to Toyota Motor Corp., Honda Motor Co. and Tesla Inc. among others, according to the websites of Meridian and Wanfeng.