DETROIT — General Motors is extending temporary shutdowns at three of its North American plants due to a global semiconductor chip shortage, which is expected to shed billions off automakers’ earnings in 2021.
The decision to extend the shutdowns at car and crossover plants in Kansas, Mexico and Ontario, 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. The San Luis Potosi plant in Mexico is now scheduled to be down through the end of March, while the U.S. 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 $1.5 billion and $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.”
Automakers and parts suppliers began warning of the shortage late last year after demand for vehicles rebounded more strongly than expected after automakers were forced to shut down production last spring to help contain the coronavirus pandemic.
Consulting firm AlixPartners estimates the chip shortage to cut $60.6 billion in revenue from the global automotive industry this year. That estimate includes the entire supply chain — from dealers and automakers to large suppliers and their smaller counterparts.
Semiconductor chips are extremely important components of new vehicles for areas like infotainment systems and more basic parts such as power steering and brakes.
Depending on the vehicle and its options, experts say a vehicle could have hundreds of semiconductors. Higher-priced vehicles with advanced safety and infotainment systems have far more and different types of chips than a base model.
Source: Business - cnbc.com
