Ford CEO Jim Farley speaks with Yahoo Finance's Seana Smith about supply chain and labor issues the auto giant is grappling with.
SEANA SMITH: Ford shares have been hit hard. The stock's off just about 20% since warning earlier this month that inflation and supply chain issues are going to cost the company an additional billion dollars in the current quarter, also sidelining up to 45,000 vehicles because of missing parts. I spoke with Jim Farley, the CEO of Ford, last night ahead of the big unveil of the redesigned Super Duty lineup and asked him about the persistent supply challenges and how long they could potentially last.
JIM FARLEY: The biggest issue we're seeing is not at Ford, but it's their suppliers. We have a few suppliers that have high absenteeism. They've been struggling to ship us parts. We've had to store some trucks here in the third quarter because of that. So supply chain issues and labor shortages are really highly tied now. It's not just ships anymore. It's changing complexity. So I think that's the biggest issue we're seeing in the economy right now.
SEANA SMITH: Jim, how long until you see some of these challenges begin to subside?
- I have stopped forecasting. I mean, bottom line is we think it's going to happen continuing in the foreseeable future. I think we're very good at dealing with these now. We're gotten better and better, more efficient in helping our suppliers find labor, whatever it takes. It does feel like Whac-A-Mole, but we're getting better at doing that.
And I guess I think we should kind of count on this happening for some time. I don't think the labor market's going to ease any time soon. It has a big impact on us, so we're kind of running our business now and have developed a bit of a rhythm around this challenges that we're seeing.
And I think it's going to extend way into next year. Does it end at next year or year after or halfway through? I don't know. I don't think we should count on any of that.
SEANA SMITH: So Ford, along with many of its competitors, having a tough couple of months at least ahead of them, Dave. It was interesting though, just first talking about the supply chain aspect of this, right? He was saying, it's not so much with Ford, and it's not only-- it doesn't only have to do with chips, which we've talked so much about here over the last several months.
Now, one of the big issues when it comes to suppliers is their ability to hire, their ability to keep up with demand. That's a big reason why they aren't able to give 45,000 more vehicles to dealers to complete those cars this current quarter. Obviously, a huge concern here for the company for the rest of the year. Those problems likely remaining.
And then, of course, the next big question is what this does to cost because we know Ford has already raised the cost of some of its vehicles, especially what they're seeing in the investment vehicle space. But whether or not we could potentially see more of that, he didn't say no. Definitely left the door open there.
- He also left the door open for how long this takes to fix.
SEANA SMITH: Yeah.
- And it sounded very open ended on that behalf. They've got, you mentioned, 40,000 to 45,000 cars parked that don't have enough parts. GM has 95,000 cars parked that cannot get enough parts. This is a global issue. And now Ford has created a position just for that supply chain officer that they are trying now to create and to hire for because their CFO is trying to solve these problems. It's not going away.
And you talk about what's next-- EVs. How do they find the components? And to your point, it goes well beyond the chip shortage. We're talking about battery components are the massive shortfalling that we will have for the next decade when it comes to EVs. RJ Scaringe talked about this six months ago, saying 90% of the supply chain for batteries does not exist today.
So Rachelle, this is a problem that's not going away. Maybe it goes back to our prime segment on automation. Maybe that's the solution.
RACHELLE AKUFFO: I mean, obviously, we know that Ford does use a level of automation. But as they were saying, it's not so much a Ford problem, but all along the supply chains, that lack of labor, every little step adding an extra cost there. And even when you look at what's most affected in terms of some of these shortages, it's mainly these high-margin trucks and SUVs that haven't been able to get to dealers.
And, of course, when you think of, like, the best-selling trucks, it's their F-150 and, obviously, where they're trying to get the Lightning out as well. So these are the most in-demand trucks and SUVs that people want. So you've got to imagine that must be incredibly frustrating to not be able to get those to the hands of dealers and, in turn, the customers as well.
SEANA SMITH: Yeah. And he did say it was much of a timing issue. He expects to get all those vehicles that are backlogged right now out in the fourth quarter, so he doesn't expect that to bleed into next year, at least in terms of the delays that we have been seeing.
On the EV side though, he said they're still on pace. And they have very ambitious goals, delivering 600-- or producing 600,000 EVs by 2023, 2 million by 2026. So supply chain obviously could snarl some of those plans.
- On pace, but they already stopped taking orders for the F-150 Lightning because--
SEANA SMITH: Yeah, because of the strong demand.
- --it is so popular.
SEANA SMITH: Yeah.
- So all right, good stuff.