Ford will restructure its supply chain after $1 billion in unexpected quarterly costs
Ford Motor recently announced plans to restructure its global supply chain, just days after the company stated it expects an additional $1 billion in unexpected 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 performance of vehicles', according to Ford’s statement.
Ford’s Chief Financial Officer John Lawler will lead the restructuring until the company selects someone to fill the newly established position of Chief Supply Chain Officer. Lawler comes at a time when parts and raw material costs for automakers and suppliers have drastically increased during the COVID-19 pandemic. The increases occurred amid severe supply chain issues, including a persistent global shortage of key semiconductor chips for vehicle production.
The company stated on Monday that recent negotiations resulted in supplier costs related to inflation that were as much as $1 billion higher than previously expected during the third quarter. This announcement, including a preliminary disclosure of some expected earnings, caused the worst day for Ford’s shares in over 11 years. The restructuring is not directly related to the automaker’s announcement earlier this week, according to Ford spokesperson T.R. Reid, as reported by CNBC.
