Magnesium flares in Ford's face - the week

By Graeme Roberts | 11 May 2018

The last thing Ford needs is lengthy disruption to production of its top-selling, high-margin F-150 truck line built in Kansas City (photo) and Dearborn

The last thing Ford needs is lengthy disruption to production of its top-selling, high-margin F-150 truck line built in Kansas City (photo) and Dearborn

A seemingly minor incident (though not for those involved directly) made more public this week shows the fragility of the global supply chain should just one link fail.

Although it happened last week, we learned only yesterday Ford supplier Meridian Magnesium Products had endured a fire at its Plymouth, Michigan factory leading to a shortage of die-cast components. That in turn halted production of the F-150 pickup, first at Kansas City and then at Dearborn. Production of the larger, commercial-grade Super Duty models went down at the Kentucky Truck Plant in Louisville but Ford expected output to continue at Avon Lake, Ohio.

Chinese-owned Meridian reportedly has some production of other parts still going at Plymouth and is a global operation with factories in several countries so you'd expect it is doing everything it can to restore supply but, if single sets of Ford-specific tooling went up in smoke, well, midnight oil is sure to be burned in the machine shop. The supplier reportedly expects the damaged part of the factory to be repaired and back in operation within four months.

Ford was the main OEM hit by the disruption but BMW and FCA operations in the US reportedly were 'adjusting production schedules'. The good news was only two people were injured by the fire - we wish them speedy recovery. Meridian supplies the magnesium radiator support structure that holds radiators on the Ford trucks which were notably (and controversially) 'lightweighted' last full redesign with greater use of materials such as magnesium and lots of aluminium. F-150 and its cousins are high-margin products for Ford, selling, according to just-auto data, 896,764 units last year (up 9.3%) of Ford's 2,575,200 2017 total tally Year to date to the end of April, the score is 287,295, up 4.1% (Ford has sold 800,650 vehicles so far in 2018, down 3.2%). Pickup trucks are accounting for just over 13% of the US market this year so any disruption will soon be felt on the bottom line. A bullish Ford statement said there were plenty of vehicles 'in inventory' (US dealers hold huge stocks so buyers can have immediate delivery) but admitted it expected an adverse impact on near term (Q2) results, a view shared by industry watchers, though full year guidance was unchanged. We've recently looked at the auto industry's growing use of magnesium - read Magnesium in car production - a weighting game here.

Good news for post-Brexist-vote UK automaking plc this week - Canada's Magna announced the opening of an aluminium casting factory in Telford, England, to supply structural castings to Jaguar Land Rover, creating 300 new jobs in the process. The new 225,000 square feet plant – first announced two years ago - will use Magna's vacuum die-casting process. Yet again a supplier moves closer to The Customer with customer-specific operations. "These are new jobs being created – it is significant," a Magna spokesman in Germany told our Simon Warburton. "We are building it due to the needs of our customers there. We are where our customer is." Good news.

In Magna's home province of Ontario, Toyota announced a significant spend on its two Canadian factories. Essentially, it seems to be mainly about sending production of relatively low priced Corolla (sedans dominate in the US) to relatively low labour cost southern US and building higher value models like RAV4 (they do a seven seater in North America) in high-labour-cost Canada as well as making Woodstock a hybrid model hub. Canada was first to build Lexus outside Japan so clearly the plants are highly regarded by Toyota.

Also this week: a look at Renault's plans for Lada, a deep dive into the Jeep Compass tech and a look at a new body variant from Hyundai.

Have a nice weekend.

Graeme Roberts, Deputy Editor, just-auto.com