Because of the semiconductor scarcity, Ford and Nissan are decreasing automobile manufacturing

A Ford Escape Sport Utility Vehicle (SUV) undergoes a final inspection during production at the Ford Motor Co. assembly plant in Louisville, Kentucky, United States on Tuesday, April 28, 2015.

Luke Sharrett | Bloomberg | Getty Images

Ford Motor and Nissan Motor on Friday confirmed they were reducing vehicle production at plants in the US and Japan due to a semiconductor shortage, indicating growing concerns in the global auto industry in 2021.

Ford will shut down an SUV plant in Kentucky next week while Nissan is scaling back production at a plant in Japan. Both companies said they are working closely with suppliers to resolve the situation and monitor for any additional impact.

Automakers and suppliers warned of a semiconductor shortage late last year after vehicle demand rose faster than expected following a two-month shutdown of manufacturing facilities due to the coronavirus pandemic.

Semiconductors are extremely important components of new vehicles for everything from infotainment systems to other more traditional parts like power steering. They are also easily used in consumer electronics.

German automaker Volkswagen announced last month it had adjusted production at plants in China, North America and Europe due to a lack of semiconductor shipments, according to Reuters. America’s largest automaker, General Motors, has not had to cut production, but the company is closely monitoring the situation, according to spokesman David Barnas.

“We are aware of increased demand for semiconductor microchips as the auto industry continues to recover around the world,” he said in a statement sent via email. “Our supply chain organization works closely with our supply base to find solutions to our suppliers’ semiconductor needs and to reduce the impact on GM production.”

Ford’s affected plant, the Louisville Assembly Plant, builds the Ford Escape and Lincoln Corsair SUVs and employs around 3,900 hourly workers. According to Ford spokeswoman Kelli Felker, due to the shortage, it will be postponed later in the year to a next planned one-week shutdown due to the shortage.

“We are working closely with suppliers to address potential production restrictions related to the global semiconductor shortage,” she said in a statement sent via email.

The affected Nissan plant, the Japanese Oppama plant, is building the Note, a small car that is not sold in the United States. Lloryn Love-Carter, a Nissan spokeswoman in the US, said the company’s domestic production was not affected by the semiconductor shortage.

“We are working closely with our supplier partners to monitor the situation and assess the potential impact on our operations in North America,” she said in a statement sent via email.

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