General Motors, the world’s largest automaker, is extending temporary shutdowns at three assembly plants to at least mid-March due to a global shortage of semiconductor chips.
The impacted plants are in multiple counties. Facilities in Kansas, Ontario (Canada), and San Luis Potosí (Mexico) are all affected. The three plants combine to produce the Chevrolet Malibu, Buick Encore, Cadillac XT4, GMC Terrain, Chevy Equinox, and Chevy Trax vehicles.
Chip Shortage Continues
The shutdowns, which were initially only supposed to last one week, will be re-assessed in mid-March. They are intended to ensure that the company has enough semiconductor chips available to produce its most profitable lines of pick-up trucks and SUVs.
“Semiconductor supply remains an issue that is facing the entire industry,” GM said in the news release. “GM’s plan is to leverage every available semiconductor to build and ship our most popular and in-demand products, including full-size trucks and SUVs, and Corvettes for our customers.”
These chips are extremely important components of almost every new vehicle. They are used for a variety of purposes. They are found in everything from infotainment systems to more traditional parts like power steering systems. Semiconductor chips also used in consumer electronics — think PCs, smartphones, and gaming consoles.
No End in Sight?
Automakers and parts suppliers began warning of a semiconductor shortage late last year. The demand for new vehicles rebounded stronger than expected following the initial downturn caused by the pandemic. Many auto factories were completely closed for two months last Spring when Covid-19 spread around the globe. Now many brands are struggling to catch back up.
Ford was recently forced to cut production of its highly profitable F-150 trucks due to the chip shortage. They said they were unable to prioritize production of the pick-ups, since they use unique chips compared to other vehicle models.
Ford recently said the chip shortage could lower its earnings anywhere from $1 to $2.5 billion this year. It’s not clear what the financial impact will be on GM’s earnings in 2021.
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