Fate of Ford F-150, Super Duty trucks depends on plant shredded by tornado
Detroit Free Press (MI)
Apr. 22--After more than a week, still no word. And with big money at stake.
A tornado that ripped apart the roof and interior of a BorgWarner factory in Seneca, South Carolina, and killed a security guard stationed outside on April 13 has left Fiat Chrysler Automobiles, Toyota and Ford Motor Co., wondering when operations will return to normal.
The three automakers count on the Auburn Hills-based parts supplier for an essential car part used in the bestselling Ram 1500, Toyota Tundra and Ford F-150, Super Duty trucks, Expedition, Explorer, Transit van, Lincoln Navigator and Lincoln Aviator.
"We are working closely with their teams on recovery operations and startup plans," said Kaileen Connelly, an FCA spokeswoman.
The item may not sound like a big deal -- what's called a transfer case -- but it's so important that Ford alerted the Securities and Exchange Commission on Friday that the "company's assets" had been damaged at the enormous drivetrain plant.
A transfer case is a core part of the vehicle's four-wheel drive system.
"Currently, the time to resume operations, partially or in full, cannot be estimated, and we have not yet determined the full impacts to our financial position, results of operations, or cash flows, including the timing of those impacts," the SEC filing said.
Ford spokesman T.R. Reid said Tuesday, "There's a lot of people down there, assessing and trying to figure out how to bring back up their capabilities."
An updated version of the highly profitable Ford F-150 is tentatively scheduled to launch in the fall. Currently, it is the oldest truck on the market. Timely launches protect consumer market share and generate much-needed revenue.
At issue, of course, is whether the much-anticipated F-150 launch will be delayed.
"We'll have more details to share on the reveal timing of our upcoming all-new vehicles once we have safely brought our factories and facilities back online," said Mike Levine, Ford North America Product Communications manager.
An F-150 launch media briefing scheduled for April 29 was postponed already because of the health crisis.
When asked specifically what impact the tornado had on the F-150 launch, Kelli Felker, Ford global manufacturing spokeswoman, said, "None."
She referred to a statement released Friday that said, "We are working closely with the supplier to manage the situation and to determine next steps."
Michelle Collins, spokeswoman at BorgWarner, said in a statement, "Currently, the time to resume operations, partially or in full, cannot be estimated and we have no further updates to provide at this time."
While both FCA and Toyota have been hit hard by the situation, no company sustained more pain than Ford. It already has a projected $2 billion loss for the first quarter, higher than expected warranty costs, ongoing challenges with global restructuring, shrinking market share, falling stock price and crucial timelines of new products threatened by a pandemic.
But there may be a glimmer of sunshine during this dark period.
Because of having plants shuttered due to COVID19, Ford at least didn't need to stop production in response to the tornado. And that's significant, said Patrick Penfield, a supply chain management professor who teaches at Syracuse University in New York.
"If you have high quality standards and your tooling is very expensive, you're going to have a difficult time trying to find a dual source. So you get a sole source situation. But when something happens, you're in pretty bad straits," Penfield said. "The tooling, everybody forgets about that -- the special machines and special equipment needed to make the parts needed. Ford is going to pay for the tooling for that supplier."
In May 2018, Ford had to shut down truck production after a major fire at Meridian Magnesium Products in Eaton, Michigan. It brought production to a standstill for many automakers.
Situations like the fire and the tornado rarely happen but when they do, it's "catastrophic," Penfield said.
And now Ford has been hit hard twice in two years.
"It's kind of a risk-reward type situation," Penfield said. "You can dual source but at what cost? Chances of these kinds of situation are very small but when it happens, it puts you on your back. The only saving grace for Ford would be the lack of current demand right now. They may have lucked out. The question is how bad the tooling is damaged."
Ford and BorgWarner declined to discuss details of the situation.
While Ford and other automakers wait to hear about the status of their supplier, the Detroit Three automakers have been meeting daily with UAW leaders to try to figure out when to re-open plants nationally that have been closed since March.
While FCA has announced that it plans to open on May 4, union leaders are still reviewing health and safety issues that could affect that decision. General Motors said again Tuesday that plans are fluid. And Ford said no decisions have been made.
While Ford has not confirmed a restart date, a letter dated April 16 from building chairman Allen Hughes to union members at the Kentucky Truck Plant signaled a tentative May 4 production start with two shifts, though plans were "changing daily, party due to changes to the coronavirus guidelines from the CDC."
The letter, provided by a union member at the site, listed outstanding orders for Super Duty, Expedition and Lincoln Navigators and said, "the uncertainty is very stressful on everyone." Hughes did not respond to an email requesting comment.
At Louisville Assembly, building chairman Herb Hibbs said in a letter Friday to UAW members that plant officials would neither confirm nor deny a May 4 start date but everyone is expected to have at least a week's notice when robocalls begin.
While Ford works to get its factories up and running, the company notified 550 salaried employees in non-manufacturing roles that they would be receiving 75% of their pay starting April 14, Reid said.
The so-called "down time" status is for people whose jobs cannot be done satisfactorily from home, and most of them live in southeast Michigan, Reid said.
"Most importantly, there will be no change in their health care benefits," he said. "Safety and security first."
Contact Phoebe Wall Howard: 313-222-6512or [email protected]. Follow her on Twitter @phoebesaid. Read more on Ford and sign up for our autos newsletter.