October 4, 2022
Ford to restructure supply chain after  billion in unforeseen costs

Ford CEO Jim Farley at the company’s Dearborn, Michigan, plant, where it is building the electric F-150 Lightning, April 26, 2022.

CNBC | Michael Wayland

DETROIT — Ford Motor on Thursday announced plans to restructure its global supply chain, days after the company said it expected to book an additional $1 billion in unforeseen supplier costs during the third quarter.

The supply chain restructuring aims to support “efficient and reliable sourcing of components, internal development of key technologies and capabilities, and world-class cost and quality execution,” said the automaker. said in a release.

The effort will be led by Ford’s Chief Financial Officer John Lawler on an interim basis until the company selects someone to fill the newly created Chief Supply Chain Officer. place.

Lawler is stepping in at a time when parts and raw material costs for automakers and suppliers are rising during the coronavirus pandemic. The increase comes amid serious supply chain problems, including a global shortage of critical semiconductor chips.

On Monday, Ford said supplier costs related to inflation as a result of recent negotiations are $1 billion higher than previously expected during the third quarter. The announcement, including the pre-release of some earnings expectations, led Ford’s stock to have its worst day in more than 11 years.

According to Ford spokesman TR Reid, the restructuring is not directly linked to the automaker’s announcement earlier this week. Ford’s supply chain has been undergoing a change for some time amid industry supply chain problems and the shift to electric vehicles, he said.

“As we have acknowledged before, this is an area we have improved upon, and there is still additional room for improvement,” he said.

Ford vice president of supply chain Jonathan Jennings will also take additional responsibility for supplier technical support and quality, the company said. He will report to Lawler.

Supply chain plans were announced in addition to executive changes and appointments involving electric vehicles, product development and other areas of the company.

Ford said the changes are an acceleration of CEO Jim Farley’s “Ford Plus Plan for Growth and Value Creation”.

Ford shares fall after company warns of an additional $1 billion in costs

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