Chip shortage idles GM plants
General Motors will keep three of its assembly plants shuttered until at least midApril and will idle a fourth because of a severe shortage of semiconductor chips used in vehicle parts.
But the automaker is doing everything it can to protect the production of its full-size pickups and SUVs, which are its big profit makers.
Demand for semiconductor chips is up in part because of the coronavirus pandemic has led to an increased demand for laptop computers and other personal electronics that use the chips. Cars also use them in parts and infotainment systems. In fact, one car part could use 500 to 1,500 chips depending on the complexity of the part, analysts said.
The company on Feb. 8 shut down production for both shifts — initially until mid-March — at plants in Kansas City, Kan.; Ingersoll, Ontario, Canada; and San Luis Potosi, Mexico.
On Wednesday, GM said production at the Kansas City and Ingersoll plants will now be shuttered until mid-April. GM is extending downtime at San Luis Potosi through the end of March.
Additionally, a plant in Brazil’s Rio Grande do Sul state will be idled in April and May.
“GM continues to leverage every available semiconductor to build and ship our most popular and in-demand products, including full-size trucks and SUVs for our customers,” said David Barnas, GM spokesman. “GM has not taken downtime or reduced shifts at any of its truck plants due to the shortage.”
GM builds its heavy-duty, full-size pickups at its Flint plant in Michigan and its lightduty, full-size pickups at the Fort Wayne plant in Indiana. It builds its midsize pickups at Wentzville in Missouri and its full-size SUVs at Arlington in Texas.
GM had to idle its Wentzville, Arlington and Fort Wayne facilities last month as severe winter storms ravaged the nation, disrupting production.
Barnas said GM’s supplychain team is working closely with its suppliers to find solutions for the semiconductor requirements and to mitigate effects on GM vehicle production.
“Our intent is to make up as much production lost at these plants as possible,” Barnas said. “We contemplated this downtime when we discussed our outlook for 2021 last month.”
But according to global consulting firm AlixPartners, the present chip shortages could cost the global auto industry $14.3 billion or more in revenues in the first quarter and $60.6 billion for the year. The firm said the losses may not be recouped for another year or two depending on other economic factors that could affect the industry.
On Feb. 24, President Joe Biden signed an executive order to help the auto industry by studying ways to improve the supply chain and mitigate the impact of the chips shortage.
“The current semiconductor automotive chip shortage has disrupted production plans for automakers and hurt workers,” said Brian Rothenberg, spokesman for the United Auto Workers union. “It is a stark reminder of why we must make critical manufacturing supplies that are needed for our economic well-being, health, and national security in the United States.”