Parts Issue' Slowed Launch of Ford's F-Series Super Duty Truck
October 13 2016 - 3:20PM
Dow Jones News
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 15:05 ET (19:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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