Ford to restructure supply chain after $1 billion in unexpected costs

Ford CEO Jim Farley at the Dearborn, Michigan plant where the company is building the electric F-150 Lightning on April 26, 2022.

CNBC | Michael Wayland

DETROIT — Ford Motor on Thursday announced plans to restructure its global supply chain, days after the company said it expected to book an additional $1 billion in unexpected supplier costs in the third quarter.

The supply chain restructuring aims to “support efficient and reliable component sourcing, in-house development of key technologies and capabilities, and world-class quality and cost execution,” the automaker said in a statement. communicated.

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The effort will be led by Ford’s chief financial officer, John Lawler, on an interim basis until a chief supply chain officer is selected. Lawler comes at a time when parts and raw material costs for automakers and suppliers have skyrocketed during the coronavirus pandemic. The increases came amid serious supply chain issues, including an ongoing global shortage of crucial semiconductor chips.

On Monday, Ford said recent negotiations resulted in inflation-related supplier costs $1 billion higher than expected in the third quarter. The announcement, including a pre-release of some earnings forecasts, sent Ford stock to its worst day in more than 11 years.

Jonathan Jennings, Ford’s vice president of supply chain, will also take on additional responsibility for technical support and supplier quality, Ford said. He will report to Lawler.

The supply chain plans were announced in addition to other management changes and appointments relating to electric vehicles, product development and other areas of the business.

Ford said the changes are an acceleration of CEO Jim Farley’s “Ford+ plan for growth and value creation.”

Ford shares tumble after company warns of additional $1 billion in costs

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