Ford Motor Co. has hired a second supplier to provide steel
frames for its best-selling F-150 truck, hoping to better meet
delivery demands amid a parts shortage from its current supplier,
according to people familiar with the matter.
The Dearborn, Mich., auto maker is struggling to get as many
F-150s on dealer lots as originally planned because its supplier,
Mexico-based Metalsa S.A, is having trouble building enough frames
to keep pace with production needs, according to the people.
The frame shortage has been ongoing for months and continues to
stifle production at Ford's two pickup plants at a time when
light-truck demand—juiced by low gas prices—is running at a 10-year
high.
To fill the gap, Ford has tapped Livonia, Mich.-based supplier
Tower International to build the additional frames, which are
expected to become available in October, people familiar with the
plans say.
Meanwhile, the auto maker has been shipping frames to its
factories by truck rather than rail to get them there faster but at
a higher cost, these people say.
With not enough frames, Ford has had to cancel planned overtime,
and at times, temporarily halt the assembly line during regular
shift work as plant employees wait for more frame deliveries to
arrive, the people say.
In a statement, Ford said it anticipates having full
availability of the F-150 by the end of the third quarter.
"We are at full production now, we are building stock at dealers
and we continue to roll out additional derivatives," the company
said. "As with all vehicle launches, we are working closely with
our suppliers to meet customer demand for the truck."
A Tower spokesman declined to comment but public filings show
the parts supplier currently makes body structures for the F-series
truck. Tower also builds frames for Ford's Econoline van at its
plant in Bellevue, Ohio—a facility that is currently undergoing a
major expansion.
Put on sale in late 2014 as a lighter, more fuel-efficient
offering, the relatively long transition period it has taken to
move from steel bodies to aluminum has been closely watched by Wall
Street because the F-150 drives a substantial share of Ford's
profit.
As Ford has worked to ramp up F150 production, the tight
inventories on the truck have dented market share and clipped
earnings, providing a dose of momentum for rivals General Motors
Co. and Fiat Chrysler Automobiles NV.
Ford's F-150 has been the industry's best seller since the
1970s. Long built with steel panels, the auto maker transitioned to
aluminum for a redesigned 2015 version, a risky and costly move
aimed at lightening the vehicle significantly so it can meet
stringent U.S. emissions standards.
The vehicle's frame is steel, the industry standard for
trucks.
The F-150 is built at factories in Dearborn, Mich. and Kansas
City, Mo.; a heavier duty version of the F-series built in
Louisville will move to aluminum body panels starting next
year.
Aluminum presents its own manufacturing challenges for auto
makers because it's more expensive than steel and more difficult to
stamp. But in this case, it is the steel frame that is causing the
headache.
The F-150's steel frame was re-engineered for the 2015 makeover,
and is about 60 pounds lighter than the old one. It has a higher
percentage of high-strength steel and is built with a new process
that varies the thickness of the metal used to reduce weight.
Still unclear is what exactly at Metalsa is causing the
shortage. Metalsa officials couldn't be reached.
The frames are built by Metalsa at a factory in Elizabethtown,
Ky.—about 400 miles south of Detroit and 530 miles east of Kansas
City. The shortage has become so acute that Ford has sent a team of
"fixers" from advisory firm KPMG to Metalsa's factory in Kentucky
to ensure smoother operations, people familiar with the move
say.
Despite the complications, Ford continues to churn out profits
in North America, reporting a record quarterly profit of $2.6
billion for the region last month, as the popularity of its new
models has helped boost pricing and lower discounts across the
lineup.
The company is banking on healthier truck supplies to
supercharge earnings in the second half of the year with the
company targeting operating margins of 8.5% to 9.5%.
Write to Christina Rogers at christina.rogers@wsj.com and Mike
Ramsey at michael.ramsey@wsj.com
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