The shortage of Japanese-made parts could hit Ford hard on the bottom line, the maker warns.
Ford Motor Co. has warned, in a government filing, that it expects to feel a significant impact from the Japanese auto industry meltdown due to ongoing parts shortages.
The crisis has already begun to affect the maker’s production and will soon disrupt operations, especially in Asia, the U.S. maker said in filing with the Securities and Exchange Commission. That will likely lower financial results in the coming months, Ford declared.
“We could have to reduce or temporarily cease production of vehicles, which could adversely affect our and Ford Motor Credit Company’s financial condition and results of operations,” Ford stated.
Nonetheless, the impact is likely to be less severe than that being felt by Japanese automakers such as Toyota and Nissan, who lost much of the last month’s production at their home plants and will be seeing further cuts in factories around the world in the weeks to come, industry analysts predict.
“We now expect that beginning in the last week of April and continuing into May, certain of our operations in the Asia-Pacific region (including certain of our joint venture operations) will be affected by shortages of components and vehicle kits as a result of the events in Japan,” the Ford filing stated. “Although this likely will require us and the affected joint venture affiliates to reduce or temporarily cease production of certain vehicles in the Asia-Pacific region, we do not expect this production disruption would have a material impact on our overall results.”
Ford has already seen some disruptions to U.S. operations. The maker has told dealers to temporarily curtail placing orders for vehicles in several shades of black and red. Merck, the German chemical company, and the only supplier for the necessary pigments, reported its plant in northeastern Japan heavily damaged by the March 11 earthquake and subsequent tsunami.
On the positive side, Ford noted, it has no production facilities in Japan, and it is “working closely with those suppliers (impacted by last month’s disaster) to assess their production and shipping capabilities and to minimize any disruptions. We also are pursuing other sources of supply as necessary and practicable.”
By some estimates, global car sales could be reduced by as much as 6% this year due to production cuts related to the Japanese disaster. Toyota reported losing about 260,000 units of production in the month its home plants were down – and it reduced output in other parts of the world to preserve parts. The maker began half-speed production in Japan on Monday, but will go down again, later this month for the annual Japanese Golden Week holiday.
Other makers, including Nissan and Honda, are also producing well below capacity, and many Japanese “transplant” lines in North America, Europe and other parts of Asia also are feeling the pinch.
According to a recent report from Deutsche Bank, all the various Japanese automakers are expected to report losses for the first half of the new fiscal year, which began March 1, just days before the Japanese crisis began.