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The chip shortage comes home to roost: Ford suspends operations at a major U.S. plant as the shortage continues to batter the auto industry

April 1, 2022, 5:41 PM UTC

The global chip shortage has been wreaking havoc on the supply chain for over a year, and now that shortage is temporarily shutting down a major U.S. automaker.  

Ford announced that its Flat Rock Assembly Plant near Detroit will be down next week, specifically due to the semiconductor shortage.  

“The global semiconductor shortage continues to affect Ford’s North American plants — along with automakers and other industries around the world,” Ford spokesperson Kelli Felker said this week statements reported by Detroit News.

Automakers around the world have been hit by a semiconductor shortage since February of last year. These chips are essential to any type of electrical machinery, but especially so for cars. Strained supply chains and industrial standstills from earlier in the pandemic caused chip production in big manufacturing countries to slow down in 2021, and now this lower supply of chips has carried over into 2022.

This is not the first time a major U.S. company has had to close down a production plant because of the chip shortage. Last week, GM announced it would be idling a major pickup truck manufacturing plant near Fort Wayne, Ind., for two weeks in April because of the ongoing dearth of chips. 

“There is still uncertainty and unpredictability in the semiconductor supply base, and we are actively working with our suppliers to mitigate potential issues moving forward,” GM said in a statement announcing the temporary closure of the Indiana plant.

Ford also has previously had to suspend operations at several plants because of the global chip shortage, including eight last month, located throughout the U.S., Mexico, and Canada. Even the largest manufacturing plants haven’t been spared from the shortage, as Ford´s storied Chicago Assembly, the oldest manufacturing plant in the company’s history, has been forced to close down several times since last spring because of the semiconductor shortage, most recently last February.

When announcing the closure of its Indiana plant, a GM spokesperson said that its supply of semiconductor chips has been slightly better in the first few months of 2022 compared to last year. But stores are still low relative to the demand for vehicles, and hampered supply chains and distribution lines means that it is still difficult to get these components to the plants.

The spokesperson also said that the ongoing Ukraine conflict has had little impact on the semiconductor shortage, but the war has made other car parts in general less accessible. 

In March, the S&P Global Mobility forecasted that the crisis could lower production output for new light vehicles by 2.6 million units over the next two years. The conflict has aggravated a supply chain and logistics system that was already strained, and Ukraine has historically been a major provider of wire harnesses— components that relay information and electricity throughout the vehicle—to the global carmaking economy.

“Many of our suppliers, especially for wiring harnesses, were in Ukraine, or are in Ukraine,” Audi CEO Markus Duesmann said at a Volkswagen Group roundtable in March.

The conflict is expected to hit European carmakers especially hard, which are more reliant on Ukrainian imports of auto parts. 

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