Ford restructures supply chain after $1 billion in unexpected costs

The company’s Dearborn, Michigan-based Ford CEO Jim Farley, located the factory where they are building the electric F-150 Lightning on April 26, 2022.

CNBC | Michael Wayland

ADVICE – Ford Motor on Thursday announced plans to restructure its global supply chain, days after the company said it expected to put 1 billion dollars more in unexpected supplier costs in the third quarter.

The supply chain restructuring aims to “support efficient and reliable sourcing of components, in-house development of critical technologies and capabilities, and world-class cost and quality realization” , car manufacturer said in a release.

The effort will be temporarily led by Ford Chief Financial Officer John Lawler until the company selects someone to fill the newly created supply chain manager position. Position.

Lawler is entering a time when parts and raw material cost for automakers and suppliers has skyrocketed in time coronavirus pandemic. The increase has come amid severe supply chain problems, including a shortage of key semiconductor chips globally.

On Monday, Ford said recent negotiations resulted in inflation-related supplier costs rising by $1 billion more than previously expected in the third quarter. The announcement, including the pre-announcing of some earnings expectations, makes Ford’s stock worst day in over 11 years.

The restructuring is not directly related to the automaker’s announcement earlier this week, according to Ford spokesman TR Reid. He said the changes to Ford’s supply chain have been underway for some time amid a troubled industry supply chain and a shift to electric vehicles.

“As we’ve acknowledged before, this is an area where we’ve gotten better and still have a lot of room for improvement,” he said.

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

The supply chain plans were announced along with other executive changes and appointments related to electric vehicles, product development and other areas of the company.

Ford says the changes are a CEO push Jim Farley’s “Ford + plan for growth and value creation. “

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

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