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Why Ford Has Stopped Production of America’s Best-Selling Pickup

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Natasha Bach
Natasha Bach
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By
Natasha Bach
Natasha Bach
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May 10, 2018, 5:34 AM ET
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There won’t be the usual number of new F-150 pickup trucks rolling off the Ford production lines, at least for now.

The F-150, a top seller for Ford and one of the top-selling vehicles in the U.S. for more than 40 years, is facing a production halt. Ford announced that it was suspending production of all F-150s, as well as the Super Duty, due to a May 2 fire at a parts factory.

The fire, which took place at Meridian Lightweight Technologies’ facility in Easton Rapids, Mich., compromised a number of critical components for the production of the F-150. Among other items, Meridian supplies Ford with the magnesium radiator support structure, which holds radiators on the trucks. It is Ford’s only supplier of this product in the U.S., and without it, the truck’s production is unable to continue.

Earlier this week, Ford sent home close to 3,600 workers at its plant in Kansas City. The other assembly plant where the F-150 is built, in Dearborn, Mich., will also face temporary lay-offs, affecting approximately 4,000 workers.

Ford estimates that it still has an 84-day supply of the trucks, meaning that the shortage will not be felt by consumers in the immediate-term. However, that may change depending on the length of the production halt, which has not yet been determined.

The F-150 is a critical brand for Ford. According to The Detroit Free Press, an analyst found that the enterprise value of the trucks is greater than that of Ford overall. Close to 900,000 were sold last year, with an additional 287,295 sold so far this year.

The truck is responsible for about 28% of Ford’s total sales, generating $41 billion in revenue last year. According to one analyst, just a two-week production halt of the truck could cut as much as $310 million from Ford’s second quarter profits.

Last month, Ford issued a safety recall on the F-150, affecting nearly 350,000 new trucks.

Following the Wednesday announcement, Ford (F) shares closed down 1.9% at $11.06.

Production at General Motors (GM), Fiat Chrysler (FCAU), and Mercedes was also disrupted due to the Meridian fire.

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