F Ford Motor Company

By Christina Rogers 

Ford Motor Co.'s launch of the hotly anticipated F-Series Super Duty truck was slowed in late summer because of unspecified "parts issues," a union official told assembly workers in a letter, presenting a potential drag on third-quarter earnings amid concerns about cooling U.S. light-vehicle demand.

In a newsletter recently distributed to United Auto Workers members in Louisville, Ky., the factory's union chairman, Rodney Janes, said hiccups are being ironed out, but it would be "impossible to build all the lost units in the third-quarter." This will likely lead to additional work in the fourth quarter as the company races to meet robust demand for the redesigned pickup truck, a best seller and among the industry's most profitable products.

In an interview Thursday, Mr. Janes said the launch of the product is going "fabulous" and the company is ahead of a so-called acceleration curve. "There's always a possibility of parts issues," he said. "When launching a new truck, you don't come out of the gate going 1,000 mile per hour. If there is a problem, you stop right there."

Ford spokeswoman Kelli Felker said "we continue ramping up production on the all-new Super Duty. We are working closely with our suppliers to meet customer demand for the truck, which has been outstanding."

Pickup trucks have been in hot demand in recent years as construction work and other economic activity has accelerated and gasoline prices have fallen.

Ford made waves when it re-engineered its F-Series trucks with aluminum body panels instead of steel. It started by selling a remade version of the lighter-duty F-150 in late 2014 and then moved on to begin selling a heavier Super Duty version last month.

The Super Duty is priced in a range beginning at $32,500 and extending to nearly $80,000. It hasn't been entirely redesigned in nearly two decades, leading to a disproportionately high contribution to Ford's overall earnings in recent years due to the fact costs of the old model were amortized long ago.

Auto makers book profits on wholesale numbers that stem from production, not sales on dealer lots. Major hiccups in production schedules can have an impact on quarterly profits -- Ford will report performance for the third quarter ended in September on Oct. 27.

In his note, Mr. Janes said parts issues have led to shortened workweeks and canceled several weekends of planned overtime. The UAW and the company haven't detailed specific problems.

"The launch has created situations that are way out of the norm for [the Kentucky truck plant]," the chairman wrote in the newsletter, noting that because of the downtime many employees will be working "excessive overtime" for up to a year from the launch date.

Company executives said in the spring Ford was counting on the rollout of the new Super Duty truck to lift earnings in the back half of the year, but then in July warned higher costs associated with the launch could hurt its prospects of meeting 2016 guidance.

Last year, as Ford was working to ramp up production of its new F-150, the company also struggled with parts problems that forced it to cancel planned overtime and halt the assembly line during regular shifts. That left dealers short on pickups and ultimately dented profit and market share during the year.

Write to Christina Rogers at christina.rogers@wsj.com

(END) Dow Jones Newswires

October 13, 2016 14:32 ET (18:32 GMT)

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