How Ford is navigating rare earth mineral supply chain disruptions, tariffs and more

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How Ford is navigating rare earth mineral supply chain disruptions, tariffs and more
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Ford CFO Sherry House discussed the impacts of tariffs and supply chain disruptions on the company's production and costs.
House stated that Ford is working to mitigate potential production disruptions caused by export controls on rare earth minerals from China.
Ford is collaborating with suppliers to explore options for moving production to the U.S. to reduce tariff exposure.
Ford Motor Co.'s chief financial officer outlined how tariffs and supply chain disruptions are expected to impact Ford's vehicle production and its costs during a wide-reaching interview with a Wall Street analyst June 4.
Ford CFO Sherry House said the Dearborn, Michigan-based carmaker will provide more details on the economic impact from President Donald Trump's tariffs and other policy changes in its second-quarter earnings next month. But she cautioned there are still many unknowns being sorted out, all of which could make Ford's upcoming financials "a bit lumpy," she said.
"As we move into the next couple of weeks to prepare for the quarter, if we give guidance it will be in the caveats of what we can't define," House said. "If we don't, we're going to give you every piece of information that we feel we can to help you, other analysts and investors to understand the business as much as possible.'
Here are the top takeaways from House's fireside chat with analyst Joe Spak at the UBS Auto and Auto Tech Conference in New York on June 4:
On getting parts from out of the country
House said Ford has seen some backlogs to getting rare earth minerals into the supply chain, so Spak asked how that could impact vehicle production.
'There are many components that rare earth minerals are in and many of those that are coming from China require you to now go through export controls, so there's an additional layer of administrative process that has to happen," House said.
She said sometimes the components pass through smoothly, other times there are holdups and that's when Ford has to take action to mitigate any disruptions.
"You have to look for alternative parts or alternative ways to get things," House said. "Frequently, it goes through, it just may take more time. So then you might be facing expedited shipment costs that you weren't anticipating and it just puts stress on a system that's highly organized with parts being ordered many weeks in advance."
She said Ford has been managing the issue so far, but warned, "I don't know if at some point this is going to be a larger issue for us?"
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As for Trump's latest tariff: a boost in steel and aluminum to 50%, House said the impact on Ford should be minimal because Ford buys all its aluminum from domestic suppliers and it buys 80% of steel from U.S. sources. Ford will manage any price increases in steel through "contract pricing," meaning prices have already been set.
"So when all of this hits, there is a delayed impact," she said.
On getting reimbursed for certain tariffs
On April 29, Trump signed an executive order that set up a complicated system of federal reimbursements on certain imports of auto parts and components for the next two years used in vehicles made in the United States. The order gives Detroit's automakers some relief from what Trump earlier had ordered — 25% tariffs on all imported autos which began in April and another 25% on all imported auto parts set to begin by May 3.
Spak asked House how Ford is getting the federal reimbursements for the parts that are compliant with the United States Mexico Canada Agreement as outlined in the order Trump signed at the end of April. She said a lot of that is still being defined.
"I don't completely know," House said. "So you're paying the tariffs now. I think it's very possible that there will be a delay in getting those offset. I'm talking about the parts offset. It could be by a quarter, it could be by a couple of quarters. But all of you who are looking at our financials in Q2, Q3 and Q4, are going to have to know that it's going to be a bit lumpy. You might have more expense before you actually get the money reimbursed.'
On getting suppliers outside the U.S. to move here
The good news for Ford is 80% of the parts used on its vehicles are USMCA-compliant and 80% of the vehicles it sells in the United States are built here. Still, the automaker warned during its first-quarter earnings report that tariffs will add $1.5 billion in net costs this year.
For the 20% of suppliers who import parts, House said Ford is having conversations with them, seeking ways to help mitigate Ford's exposure to tariffs and lower those costs, while also meeting the business obligations of its suppliers.
'As we face the tariff situation, we face it together," House said of Ford's suppliers. "The types of conversations we are having are around: Do you have additional capacity in the U.S.? Could you move to the U.S.? What types of investments might help you get there?'
But she explained that it is "a very complex and nuanced situation" with the supply base as to which suppliers to press for changes. Ford considers the kinds of quality, cost, technology and performance a supplier has provided in the past as to how it works with them around the tariffs, she said.
'But on an individual basis we're decided whether or not it makes sense to make some of these changes," House said. "I don't have anything to announce with you right now, but, of course, you would look at some of your higher priced components first, items that affect more vehicles, that would be the order of operations.'
On finding partners for EV and battery production
House did not address a May 25 report in the Wall Street Journal that cited sources as saying Ford would share production space in its battery plant in Kentucky with rival Nissan. The move signals Ford's retrenchment from electric vehicle investments and it helps the Japanese automaker reduce its exposure to tariffs on imported vehicles and parts.
But House did say given the "very competitive global landscape" with companies having different needs and levels of technology, it makes sense to be thinking about partnerships so as to get more efficiency, especially if it is an area where Ford does not need to be No. 1. She said the automaker is "absolutely open" to doing more partnerships than the ones it currently has in place.
On changes inside Ford workplaces
House joined Ford about a year ago and became its CFO in recent months. When asked how she has seen the company change culturally, she listed a few ways:
First, Ford has started to put more specialists in roles as opposed to putting a really great generalist in roles. For example, when it named Liz Door as its chief supply chain officer in 2023. House called her "an amazing supply chain leader at the forefront of that thinking."
House said she has challenged Ford to think about "not letting your governance define what the pace of the business is going to be."
"What happens is big companies … you have weekly meetings on a topic, you have monthly meetings on topic, you have quarterly meetings on a topic. What happens when you set up your business that way is you are running to that governance structure and you're only doing the work to get ready for that weekly meeting or monthly meeting," House said. "But if you can step back and let the priorities define the pace versus the governance structure, the business define the pace, I think you can go a lot faster and you can make sure you're focused on the right things.'
She said Ford also has looked to "break boundary constraints" in its strategy meetings.
"If you're having meetings with just one function, a lot of times you can't break the boundary constraints because you don't have everybody in the room that can tell you can do something. So you feel like you can't," House said. "So having more cross functional meetings as well. These are all tactics that can make a difference."
Jamie L. LaReau is the senior autos writer who covers Ford Motor Co. for the Detroit Free Press. Contact Jamie at [e-mail]. Follow her on Twitter @jlareauan. To sign up for our autos newsletter. Become a subscriber.