Ford Places Paint Freeze on Japan…For Now

Lori Ann LaRocco reports the following:

Ford Motor Company (NYSE:F) is telling its North American dealers not to make new car orders in certain colors because the paint is sourced out of Japan (NYSE:EWJ) and the recent earthquake has disrupted supplies.

The restricted colors are tuxedo black, royal red, red candy and red fire. The pigment to make the paint look metallic is made in Japan and production of that pigment has been halted because of disruptions resulting from earthquake. This pigment is made by a second tier supplier who then supplies the product to the paint suppliers.

The pigment is called Xirallic. Ford (NYSE:F) is not the only customer that uses this pigment. It is widely used in the auto industry. The pigment is also used in transportation equipment, cosmetics, ceramics, plastics, printing inks and media, packaging material, electronic goods as well as construction materials.

Ford (NYSE:F) maintains they have plenty of vehicles in these colors and this move is just a precaution.

“There is no shortage of these colors as we speak,” explained Todd Nissen, a Ford (NYSE:F) spokesman. “This is just a precautionary measure as we assess the situation while we adjust our future production in these colors.”  Nissen said the production level of vehicles remains unchanged.

In the first quarter, Ford (NYSE:F) plans to produce 650,000 vehicles in North America, up 13 percent versus first quarter of 2010. In the second quarter, Ford plans to build 710,000 vehicles in North America, up 9 percent compared with the second quarter of 2010.

“There is no current shortage and we are working with the supplier to see when they will go back online and are looking for color substitutes,” added Nissen.

Lori Ann LaRocco is a Senior Talent Producer at CNBC, and author of “Thriving in the New Economy:Lessons from Today’s Top Business Minds.”