Ford Production

[MoKelly]

I read today that Ford says it’s production will be 50% lower in Q2 due to chip shortages.

Looks like cars and trucks will be in short supply and at higher prices.

And the beat goes on.

MoKelly

 

[dodge man]

I’ve read the same thing with Dodge on the Challenger forum. Sounds like maybe only one Fob with a new car too.

 

[MoKelly]

Ford lost 10% of its value today after the announcement. It says the chip shortage will lower earnings between $1-$2.5 billion.

MoKelly

 

[reb]

Of more serious concern is that someone has pointed out that our military systems now rely on ICs that are made in foreign countries.

 

[fried1765]

I read today that Ford says it’s production will be 50% lower in Q2 due to chip shortages.

Looks like cars and trucks will be in short supply and at higher prices.

And the beat goes on.

MoKelly

Shortages, contrived or otherwise, can play right into a manafacturer's hands with higher selling prices!

 

[sea2summit]

Shortages, contrived or otherwise, can play right into a manafacturer's hands with higher selling prices!

If you sell 100 cars at a $10 profit per car that's a $1,000.

If you only have 50 cars to sell you have to make $20 profit per car to maintain your $1,000. I don't think anyone is benefiting from reduced inventory and increased prices at anywhere in the supply chain, that's not how economics work in the medium to long term.

 

[fried1765]

If you sell 100 cars at a $10 profit per car that's a $1,000.

If you only have 50 cars to sell you have to make $20 profit per car to maintain your $1,000. I don't think anyone is benefiting from reduced inventory and increased prices at anywhere in the supply chain, that's not how economics work in the medium to long term.

Maybe not quite that simple?

 

[sea2summit]

Maybe not quite that simple?

Not even close to that simple, however the principle is sound. People get really upset when they see the prices going up, look at your immediate response. In a shortage many people start thinking they are getting taken advantage of by some business when that's not necessarily the case. Maybe it is in some cases but I'd bet in more cases the business is just trying to get by and stay in business.

 

[ericm979]

There's still a lot of chip fabs in the US. The us military has been on a COTS drive for a while especially for non sensitive systems, purely to lower costs. Some of those may allow foreign made chips. The US government is aware that we need to increase our domestic chip production for military uses. I found a DARPA program to do that with just a few minutes of searching.

Generally the military is well aware of nationality issues with products they buy. I've personally seen a number of instances where even foreign born US citizens were kept off of projects. That may be vendors being extra cautious more than rules set by the government, but there's certainly a lot of awareness of the issue.

 

[PuffyC]

Land Rover and Mercedes Benz each halted production at two of their factories for the same reason.