Latest news with #SherryHouse
USA Today
4 days ago
- Automotive
- USA Today
How Ford is navigating rare earth mineral supply chain disruptions, tariffs and more
How Ford is navigating rare earth mineral supply chain disruptions, tariffs and more Show Caption Hide Caption Pony power: The iconic history of the Ford Mustang Explore the legendary journey of the Ford Mustang, from its groundbreaking debut in 1964 to its status as an enduring symbol of American automotive excellence. 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?" In case you missed it: Ford recall could force over 1 million drivers to use this safety technique 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 jlareau@ Follow her on Twitter @jlareauan. To sign up for our autos newsletter. Become a subscriber.
Yahoo
5 days ago
- Business
- Yahoo
Countries Fight Over Periodic Table as China Hoards Rare Earths
Quick geology lesson: There are 17 types of rare earths, and they're used as the building blocks in cars, semiconductors, missiles, drones, and more. China mines 70% and processes 90% of the world's supply. China's massive rock collection has become one of its most important bargaining chips, and as the country tightens its grip on rare earths exports, the global supply chain is showing cracks. This week, world leaders raised the alarm, with EU trade officials emphasizing yesterday the bloc's urgent need to reduce its dependence on rare earths from China. READ ALSO: US Service Economy Suffers Unexpected Trade War Blow and Unshackled Wells Fargo Fights to Regain Momentum Lost in Penalty Box When POTUS Trump raised global import tariffs in April, China said, 'Bet,' and rolled out retaliatory restrictions on seven kinds of rare earths and the magnets made from them. At the same time, China cracked down on illegal smuggling of the valuable elements that had made previous export curbs less effective. Last year, China halted exports of three rare minerals critical for making computer chips, EV batteries, and military weapons systems. Now, auto manufacturing seems to be the first major industry feeling the effects of its mineral deficiency: Ford temporarily stopped churning out SUVs at a Chicago plant last week because of a shortage of magnets, which are used not only in electric vehicle power systems but also in various components of gas-powered cars, such as power windows and headlights. Finance chief Sherry House said yesterday that restrictions are putting stress on Ford's system. Mercedes-Benz's production chief noted that it's chatting with suppliers about building up reserves, while BMW said its supply chain has been disrupted but its factories are still running. China's passing out a limited number of export permits, but experts say it's not enough to keep production running smoothly. For now, the auto industry has a stockpile of magnets to fall back on, but it's only expected to last a few months at most. Digging Deep: The US has spent hundreds of millions of dollars to bring rare earth production stateside since 2020, but it's still in the early stages of building the complicated supply chain (rare earths require more than 100 steps to process). In the meantime, US officials are pushing for access to Ukraine's rare earths, while automakers are trying to develop parts that require fewer or no rare earths. Trump and Chinese President Xi Jinping are expected to have a discussion this week that'll highlight export restrictions. It could be a tad awkward after Trump posted on social media that Xi is 'VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH.' This post first appeared on The Daily Upside. To receive delivering razor sharp analysis and perspective on all things finance, economics, and markets, subscribe to our free The Daily Upside newsletter.
Business Insider
5 days ago
- Automotive
- Business Insider
China is flexing its supply chain muscles — and the auto industry is freaking out
China dominates rare earth magnet production, and began limiting exports after Trump's trade war began. The magnets are crucial for some carmakers, with the restrictions throwing the auto industry into chaos. US and European suppliers warn that factories and production lines face shutdowns unless China relents. China is flexing its supply chain dominance as its trade war truce with the US teeters. Carmakers and parts suppliers in Europe and the US are scrambling to shift supply chains and warning of imminent production shutdowns as Chinese restrictions on rare earth metals and magnets push the industry to the brink of a serious supply shock. China halted all exports of rare-earth magnets — critical components for car manufacturers such as Tesla and BMW — in April, shortly after the Trump administration imposed a barrage of tariffs on trade partners and adversaries alike. Chinese authorities began allowing some exports in recent weeks, but global supplies have slowed to a trickle — and now carmakers are beginning to feel the pain. BMW's supply chain has been affected by the restrictions, a spokesperson for the German automaker told Business Insider. Although production at its vehicle plants was running on schedule, BMW was in discussions with suppliers to implement countermeasures, the spokesperson added. Meanwhile, Bloomberg reported that Mercedes-Benz was discussing plans to stockpile key components. A spokesperson for the German automaker told BI it was in close contact with suppliers and "evaluating and monitoring the situation very closely," but did not "see any direct restrictions." Ford had idled a factory in Chicago as a result of a rare earths shortage. A spokesperson told BI the plant was operating again. 'Alternative ways' Sherry House, Ford's CFO, addressed the rare earths supply issue in a fireside chat at the UBS auto and auto tech conference in New York on Wednesday in comments reported by the Detroit Free Press. House said it was sometimes necessary to take mitigating action and "look for alternative parts or alternative ways to get things." While Ford had been coping, she added: "I don't know if at some point this is going to be a larger issue for us?" Japanese automaker Suzuki has also temporarily suspended production of its Swift hatchback, with Reuters reporting the pause was due to the rare earth restrictions. Suzuki did not respond to a request for comment. Rare earth materials such as dysprosium and terbium are crucial components of magnets that are widely used throughout the auto industry, in electric motors that power brakes and steering, as well as factory robots used to build cars. Although many of these materials can be found around the world, China has a stranglehold over the processing of rare earths into usable material, and produces 90% of the world's annual supply of rare earth magnets. That makes them a valuable lever to pull during a global trade war, with suppliers across the world warning that the auto industry's dependency on China has put it at risk of a serious supply chain shock. The European Association of Automotive Suppliers warned on Wednesday that several production lines and plants had shut down in Europe because of the restrictions, with "urgent action" needed to safeguard automotive production and thousands of jobs in the European Union. Hildegard Müller, president of the German Association of the Automotive Industry, said in a statement that although Chinese authorities had begun granting licences to export rare earth magnets, not enough were being granted to avert supply chain shocks. "If the situation does not change quickly, production delays and even production stoppages can no longer be ruled out," Müller said. In a press conference on Wednesday, the European Union's trade commissioner, Maros Sefcovic, said he had raised the "alarming" situation facing the continent's car industry with his Chinese counterpart. 'Real-time risks' The risk of disruption extends across the Atlantic. In a statement reported by Reuters, MEMA — which represents vehicle part suppliers in the US — warned that the restrictions were posing "serious, real-time risks" to automotive supply chains. "The situation remains unresolved and the level of concern remains very high. Immediate and decisive action is needed to prevent widespread disruption and economic fallout across the vehicle supplier sector," the industry body said. In a joint letter to the Trump administration with an industry body representing automakers including General Motors and Hyundai, MEMA previously warned that the curbs could harm the production of everything from seatbelts to power steering and lead to the shutdown of vehicle production lines in the US. For a stressed-out auto industry, there's little sign of relief anytime soon. In a Truth Social post on Wednesday, Trump said Chinese Premier Xi Jinping was "extremely hard to make a deal with," after previously accusing China of reneging on a trade deal signed last month.
Korea Herald
6 days ago
- Automotive
- Korea Herald
China's rare earth export curbs hit auto industry
BERLIN/FRANKFURT, Germany (Reuters) — Some European auto parts plants have suspended output and Mercedes-Benz is considering ways to protect against shortages of rare earths, as concerns about the damage from China's restrictions on critical mineral exports deepen across the globe. China's decision in April to suspend exports of a wide range of rare earths and related magnets has upended the supply chains central to automakers, aerospace manufacturers, semiconductor companies and military contractors around the world. China's dominance of the critical mineral industry, key to the green energy transition, is increasingly viewed as a key point of leverage for Beijing in its trade war with US President Donald Trump. China produces around 90 percent of the world's rare earths, and auto industry representatives have warned of increasing threats to production due to their dependency on it for those parts. "It just puts stress on a system that's highly organized with parts being ordered many weeks in advance," said Sherry House, Ford's finance chief, at an investor conference Wednesday. She said China's export controls add administrative layers that are sometimes smooth, and sometimes not. "We're managing it. It continues to be an issue, and we continue to work the issues." EU Trade Commissioner Maros Sefcovic said Wednesday that he and his Chinese counterpart had agreed to clarify the rare earth situation as quickly as possible. "We must reduce our dependencies on all countries, particularly on a number of countries like China, on which we are more than 100 percent dependent," said EU Commissioner for Industrial Strategy Stephane Sejourne. "The export (curbs) increase our will to diversify," he said as Brussels identified 13 new projects outside the bloc aimed at increasing supplies of metals and minerals essential. Europe's auto supplier association CLEPA said several production lines have shut down after running out of supplies, the latest to warn about the growing threat to manufacturing due to the controls. Of the hundreds of requests for export licenses made by auto suppliers since early April, only a quarter have been granted so far, CLEPA added, with some requests rejected on what the association described as "highly procedural grounds." It did not identify the companies but warned of further outages. While China's announcement in April coincided with a broader package of retaliation against Washington's tariffs, the measures apply globally and are causing worry among business executives around the world. Earlier Wednesday, Mercedes-Benz production chief Joerg Burzer said he was talking to top suppliers about building "buffers" such as stockpiles to protect against potential threats to supply. Mercedes was currently not affected by the shortage. BMW said that part of its supplier network was disrupted, but its own plants were running as normal. German and US automakers have complained that the restrictions imposed by China threaten production, following a similar grievance from an Indian EV maker last week. Mathias Miedreich, board member for electrified propulsion at German automotive supplier ZF Friedrichshafen, said the company has largely been able to get needed permits from China. In a media briefing Tuesday, he said he worries though that the situation eventually could resemble the computer-chip shortage during the COVID-19 pandemic, which wiped out millions of vehicles from automakers' production plans. Many are lobbying their governments to find a quick solution but some companies only have enough supplies to last a few weeks or months, Wolfgang Weber, CEO of Germany's electrical and digital industry association ZVEI, said in an emailed statement. Swedish Autoliv, the world's biggest maker of air bags and seat belts, said its operations are not affected, but CEO Mikael Bratt said he has set up a task force to manage the situation. There are few alternatives to China. Automakers from General Motors to BMW and major suppliers like ZF and BorgWarner are researching or have developed motors with low- to zero rare earth content in a bid to cut their reliance on China, but few have managed to scale production to bring down costs. BMW has deployed a magnet-free electric motor for its latest generation of electric cars, but still requires rare earths for smaller motors powering components like windshield wipers or car window rollers. "There is no solution for the next three years except to come to an agreement with China," said Andreas Kroll, managing director of Noble Elements, a rare earths importer for medium-sized companies and startups without their own inventories. "China controls practically 99.8 percent of global production of heavy rare earths. Other countries can only produce these in minimal quantities, virtually on a laboratory scale."
Business Times
6 days ago
- Automotive
- Business Times
Mercedes, BMW step up response to China export curbs to avoid shortages
[FRANKFURT] Automakers in the US and Europe raised concerns about China's export controls on rare earth metals, as Beijing's move threatens to disrupt global car production. Mercedes-Benz Group and BMW are in talks with suppliers to prevent shortages of components containing these materials, with the former discussing stockpiling certain items. Meanwhile, Ford Motor said it's taking longer for some parts to get through China's approval process for exporting rare earths, with shipping costs rising in some cases. 'It just puts stress on a system that is highly organised,' Ford chief financial officer Sherry House said on Wednesday (Jun 4) at an industry conference in New York. The controls mean automakers must find alternative parts or ways to source supplies, she said. Ford had to idle a factory in Chicago producing the Explorer sport utility vehicle for an entire week last month due to a rare earths shortage. While its car factories are operating as usual, parts of BMW's supply network are affected by China's curbs, a spokesperson said, without giving further detail. In response to tariffs from US President Donald Trump, China in April imposed controls on rare earth exports that threaten to disrupt the global supply of key materials widely used in high-tech manufacturing, from electric vehicles to weaponry. Automakers need rare earths such as terbium for motors in electric cars, while others are used in combustion engine vehicles, such as in sensors and electronic systems. China dominates the market for processing these materials. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The potential squeeze on rare earth magnets is drawing comparisons to the global semiconductor crisis that disrupted automotive production in the wake of the coronavirus pandemic. 'It's a major issue for the industry,' John Murphy, a Bank of America auto analyst told Detroit-based reporters Wednesday at an Automotive Press Association event. 'Like other supply shocks, they are very industrious and are going to find workarounds fairly quickly.' While unlikely to force immediate production stoppages, he said that 'over time, if it's not solved, it's going to become a very expensive problem'. The industry has lobbied the Trump administration to prod China to resume shipments of rare earth materials such as dysprosium and critical components made from them such as magnets. 'Matter of weeks' 'Without swift intervention from the administration, we anticipate this to impact and potentially interrupt US auto production in just a matter of weeks,' the heads of automaker trade group Alliance for Automotive Innovation and Mema, the largest vehicle supplier association, said in a joint letter dated May 9 and addressed to several Cabinet secretaries. While carmakers do not typically purchase rare earth metals directly, major suppliers use them in electric motors and hybrid systems delivered to automakers. 'If you come into such a risk situation, then we are in constant, constant dialogue with our suppliers,' Jorg Burzer, Mercedes' head of production, told reporters on Wednesday at a plant in Rastatt, Germany. 'Naturally, we discuss with them what the best tool is for risk management, so physical buffers play a role.' Elsewhere, Rivian Automotive has been working to educate the Trump administration on the complexity of supply chains, including how challenging it would be to process rare earths in the US, chief executive officer RJ Scaringe said at the UBS conference. 'These are 24-hour days, full-court press. We have a giant team on this,' Scaringe said. BLOOMBERG
