Engines assembled as they walk through the assembly line at the General Motors (GM) manufacturing plant in Spring Hill, Tennessee on August 22, 2019.
Harrison McClary | Reuters
DETROIT – General Motors is temporarily idling or extending shutdowns at several factories across North America due to a continuing shortage of semiconductor chips affecting the global auto industry.
Temporary factory closures range from an additional week or two to several weeks for factories that have previously been inactive due to parts disruption. GM will also restart production of midsize pickup trucks on Monday after a two-week shutdown due to a shortage at a plant in Missouri.
The cost of the closures was factored into the company’s profit forecast for the year, according to GM. The automaker expects the problem to cut operating income from $ 1.5 billion to $ 2 billion this year.
“We continue to work closely with our supply base to find solutions to our suppliers’ semiconductor needs and to mitigate the impact on GM,” GM said in an emailed statement. “Our intention is to compensate as much as possible for the lost production in these factories.”
Semiconductors are key components used in infotainment, power steering and braking systems, among others. As several factories closed last year due to Covid, suppliers have diverted semiconductors from automakers to other industries, creating a shortage after consumer demand returned to stronger than expected.
GM’s plant in Spring Hill, Tennessee, will close Saturday through April 23, according to a United Auto Workers union message to workers obtained by TBEN. The plant builds the GMC Acadia and Cadillac XT5 and XT6 crossovers. GM confirmed the shutdown.
On top of that, GM said another crossover plant that produces the Chevrolet Traverse and Buick Enclave near Lansing, Mich., Will be inactive the week of April 19 and that production of the Chevrolet Blazer at a plant in Mexico will be inactive. also canceled that week.
The company is also extending downtime at factories in Kansas and Canada that produce cars and crossovers until mid-May. They produce the Chevrolet Malibu sedan and the Equinox and Cadillac XT4 crossover. Another plant in Lansing that produces the Chevrolet Camaro and Cadillac CT4 and CT5 also saw its downtime extended by two weeks until the first week of May.
For months, GM has been prioritizing the assembly of high-margin vehicles such as full-size pickup trucks by reducing production of cars and crossovers. The company even partially builds vans to be completed and shipped at a later date.
GM was forced to cut production of mid-size Chevrolet Colorado and GMC Canyon pickup trucks for two weeks. Production of the smaller trucks is expected to restart on Monday, according to GM.
Consulting firm AlixPartners estimates that the chip shortage will reduce the global auto industry’s $ 60.6 billion revenue this year.
GM said it expects to earn $ 10-11 billion, or $ 4.50 to 5.25 per share, in adjusted pre-tax profits this year. It projects adjusted free cash flow of $ 1 billion to $ 2 billion for its automotive division in 2021. The forecast takes into account the potential impact of the chip shortage, including an impact of $ 1.5 billion to $ 2.5 billion. dollars on its free cash flow.
CFO Paul Jacobson said last week he was “increasingly confident” that the automaker would meet its profit targets for the year despite plant closings.