Ford Announces Week Long Closure of Kansas City Plant

In yet another sign that the global semiconductor chip shortage will continue to affect automakers all over the world, Ford recently announced that they are being forced to halt production at a truck plant in the United States for a week because of the material shortage. According to Ford, the shutdown of a Kansas City assembly plant will start on August 23. This plant builds the company’s F-150 pickup truck, the automaker’s bestselling automobile. 

Ford isn’t the first automaker forced to halt its production because of the global chip shortage, and it more than likely will not be the last. Ford, the second-largest automaker in the United States, employs many people around the nation. According to the company, they had to close production in Kansas City because of a COVID-19 outbreak surge in Malaysia, where they were ordering new semiconductor chips.

The global chip shortage has affected automakers all around the world. Other than Toyota — who had a large stockpile of chips — many automakers have been forced to raise automobile prices, as well as slow down production of cars as they work to build up their semiconductor chip shortage. Other raw materials have been scarce as a result of the COVID-19 pandemic, though the chips shortages have been the most talked about. 

As a result of these chip shortages, production cuts and a surge in prices have hampered the automobile industry. Last month, auto sales dropped by about 3.9%, the largest drop than any other retail industry. The lack of car sales resulted in retail sales overall dropping by about 1.1% for July. Previously, most economists forecasted that the month would see a slowdown in sales, though there would still be a raise. This didn’t end up happening.

Even while other aspects of the large retail industry do well, auto sales may continue to hamper the overall retail outlook. Plus, many economists have begun to talk about a potential slowing down of economic growth for the year as a result of issues that are continuing to affect production in various industries.

Currently, the United States still has a few key problems that need to be solved before the economy can continue growing with no issues. The massive raw material shortages are one. Labor shortages have also continued to affect economic growth and overall business activity. Global supply chain bottlenecks have also kept many companies from accurately growing the inventory needed to meet high consumer demand.

Plus, the whole nation — as well as many other parts of the world — is currently dealing with new surges in COVID-19 cases because of the Delta variant. More infectious than the initial virus, the Delta variant has already caused some problems for businesses, especially those in travel-related industries. Now, however, it appears the Delta variant is causing issues in the auto industry. 

As the weeks continue, economists and businesses will more than likely better understand how Delta is going to affect business activity, if at all. Right now, many are still forecasting high expectations for the rest of the year, even with certain problems like the global chip shortage.