Industry News

Chip shortage forces GM to expand plant closures

By March 30, 2021No Comments

The decision to extend the shutdowns is an effort to prioritize chips for production of full-size pickups and SUVs

North American automakers are reeling from the shortage of semiconductor chips. Today’s vehicles require up to as many as 100 chips for its high-tech safety and infotainment systems. Credit: Oakland Press.

The global semiconductor shortage is starting to dent the world’s automakers where it hurts — in the pocket book.

General Motors announced this week it is extending temporary shutdowns at three of its North American plants due to the ongoing chip shortage, which is expected to shed billions off automakers’ earnings in 2021, CNBC reported.

The decision to extend the shutdowns at car and crossover plants in the United States, Mexico and Canada is in an effort to prioritize chips for production of GM’s full-size pickup trucks and SUVs, the company said Wednesday.

GM also said its Gravatai plant in Brazil will take downtime in April and May.

GM previously said the North American plants would be closed until at least mid-March, CNBC reported.

The San Luis Potosiplant in Mexico is now scheduled to be down through the end of March, while the US and Canada plants will be shuttered until at least mid-April.

The announcement comes a week after GM CFO Paul Jacobson said the chip shortage was improving, but the company still expected the delays to lower its free cash flow by US$1.5 billion and US$2.5 billion in 2021.

“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,” the company said in a statement.

“GM has not taken downtime or reduced shifts at any of its truck plants due to the shortage.”

At CAMI, Canadian workers build the Chevrolet Equinox, while at Fairfax, Kansas, it’s the Chevrolet Malibu and Cadillac XT4.