Ford is closing plants! Jim Farley, Ford’s CEO, mentioned the company has been forced to temporarily close several plants due to issues with the supply chain. This situation, primarily related to trade tensions between China and the United States, and the lack of key minerals for vehicle manufacturing, highlights the company’s vulnerability in theautomotive industry to global factors.
This decision to close plants has caused concern within the industry and among consumers. It is a critical moment for Ford’s futureand its ability to adapt. So, let’s find out more about this situation.
Ford forced to close plants
Jim Farley is the CEO of Ford and the one in charge of making the decision of closing some plants. This was done because he said the production is managed day by day, which creates a sense of uncertainty and pressure in the company.
Why? Because of the huge dependence of the U.S. on China, mostly when it comes to the automotive industry. Ford needs to import rare minerals which are key for manufacturing different elements of vehicles, from windshield wiper and seat belts to audio systems. Where do these materials come from? Exactly, China.
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Trade conflict
What’s happening between the U.S. and China? During Donald Trump’s presidency, the trade tensions between China and the United States forced China to implement 125% revenge tariffs, which increased the price of important minerals for the automotive industry.
Farley explained this was the main reason why Ford was closing some plants, if there’s no minerals, what are they going to manufacture? He is also concerned about the 10% tariffs Trump proposed could seriously affect the company, since Ford has already exhausted its footprint in the U.S. and now it depends on international suppliers.
Any possible solution?
Let’s hope so. Recently, there have been some signs of a better trade relationship between both countries that even a new trade agreement was achieved, which was described as a success for China and the U.S. Even Donald Trump stated his relationship with Xi Jinping, the President of China, was ‘’excellent’’.
After this new improved situation, Ford started to collaborate with China’s Ministry of Commerce to approve new trade agreements.
According to Farley, they will also work on inform and educate governments of both countries about the importance of these agreement to protect thousands of jobs in the midwest of the U.S. – where they depend a lot on the automotive industry.
Other challenges Ford has to deal with
The issue with the supply chain wasn’t the only challenge the company had to face, there have been other important difficulties like:
- A recall of more than a million of their vehicles because of a serious failure that was a risk for drivers’ safety.
- A popular Ford dealership was closed, substituted by an auto shop chain that’s spreading around the U.S.
However, not everything is bad for the company, a vehicle’s fan decided to restore a Ford classic model from 1969. This vehicle has been forgotten for about 40 years in a basement. This story shows how much consumers love the brand, no matter the passage of time.
Ford is a great representation of what companies involved in the automotive industry are dealing with. As you can see, even big names, like Ford in this case, are at risk too because the trade tensions between countries is something the company can’t control.
So, it is great Ford is trying to contribute to the education of governments on the importance of agreements that protect workers. At the end of the day, the most affected people are the ones with no voice in these situations.
