General Motors Production Adjustments Due to Chip Shortage

General Motors is implementing further production pauses and prolonging existing stoppages at numerous North American facilities. This action is a direct consequence of the ongoing global scarcity of semiconductor chips.

These chips are critical components, governing a wide range of vehicle functions, including infotainment systems, power steering, and brake systems.

Plant Closures and Restart Plans

According to an update released on Thursday, a total of eight GM assembly plants are currently impacted by these temporary closures. Initial reports regarding these shutdowns were published by CNBC.

GM has confirmed these closures to TechCrunch, and announced plans to resume production at its Wentzville Assembly plant in Missouri next week.

Prioritizing Production

A company spokesperson stated, “GM continues to utilize every available semiconductor to construct and deliver our most sought-after products, notably full-size trucks and SUVs, to our customers.”

The company’s objective is to recover as much lost production as feasible across the affected plants.

Impact on Automakers and Vehicle Production

As the global chip shortage persists, automakers like GM and Ford have been compelled to temporarily halt operations and reallocate resources towards the production of vehicles with higher profit margins, such as SUVs.

GM has clarified that it has not implemented downtime or reduced shifts at any of its facilities dedicated to full-size truck or SUV production due to the chip shortage.

Building Vehicles with Missing Components

The shortage has also led automakers to manufacture vehicles without certain parts. For example, GM announced last month that specific pickup trucks would be built without a fuel management module.

This omission will prevent these vehicles from achieving their optimal fuel efficiency.

Financial Implications

Automakers have provided forecasts regarding the financial repercussions of the shortage in 2021. Ford estimates that a prolonged shortage extending into the first half of 2021 could reduce its earnings by $1 billion to $2.5 billion.

This estimate accounts for potential cost recoveries and some production recovery in the latter half of the year.

GM's Financial Outlook

In February, GM acknowledged that the global semiconductor shortage would have a short-term effect on its production, earnings, and cash flow throughout 2021.

Specific Plant Shutdown Details

GM’s Spring Hill Assembly in Tennessee, responsible for the Cadillac XT5, Cadillac XT6, and GMC Acadia, will be closed for two weeks starting April 12.

Production of the Chevrolet Blazer at the Ramos Assembly in Mexico, and the Chevrolet Traverse and Buick Enclave at the Lansing Delta Township factory, will be temporarily suspended during the week of April 19.

Extended Downtime

Downtime at the Lansing Grand River Assembly has been extended through the week of April 26. This plant, which produces the Chevrolet Traverse and Buick Enclave, has been inactive since March 15.

The shutdown at the CAMI Assembly plant in Canada and the Fairfax Assembly plant in Kansas, where the Chevrolet Malibu and Cadillac XT4 are built, has been extended through May 10.

Both CAMI and Fairfax have been idle since the week of February 8, according to GM.

International Impact

GM’s Bupyeong 2 Assembly in Korea has been operating at 50% capacity since February 8, and its Gravataí plant in Brazil will experience downtime throughout April and May.