Engines assembled as they make their way 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 slowing down or expanding stops at several North American plants due to the shortage of semiconductor chips affecting the global auto industry.
Temporary plant closures range from an additional week or two to several weeks for plants that have already been inactive due to interruption of parts.
According to GM, the cost of the closures has been included in the company’s profit forecast for the year. The automaker expects the problem to reduce its operating profit by $ 1.5 billion to $ 2 billion this year.
“We continue to work closely with our supply base to find solutions to our suppliers’ semiconductor requirements and to mitigate the impact on GM, ”GM said in an emailed statement. “Our intention is to recover the largest amount of lost production at these plants.”
Semiconductors are key components used in entertainment systems, power steering and braking, among other things. As several plants closed last year due to Covid, suppliers shifted semiconductors to carmakers to other industries, creating a shortage after consumer demand receded further. quite what was expected.
GM’s plant in Spring Hill, Tennessee, will close from Saturday through April 23, according to a message from the United Auto Workers union to workers obtained by CNBC. The plant builds the GMC Acadia and Cadillac XT5 and XT6 crossovers. GM confirmed the shutdown.
In addition, GM said another crossover plant producing the Chevrolet Traverse and Buick enclave near Lansing, Michigan, will be inactive the week of April 19 and production of the Chevrolet Blazer at a plant in Mexico will also be canceled this week.
The company also extends downtime at plants in Kansas and Canada that produce cars and crossovers through mid-May. They produce the Chevrolet Malibu sedan and the Equinox and Cadillac XT4 crossover. Another Lansing plant producing the Chevrolet Camaro and Cadillac CT4 and CT5 also had an extended downtime of two weeks on the first of May.
For months, GM has prioritized the assembly of high-margin vehicles, such as full-size pickups, reducing the production of cars and crossovers. Even the company is partially building trucks to complete and ship later.
GM was forced to cut production of the average Chevrolet Colorado and GMC Canyon pickups for two weeks. Production on the smaller trucks is scheduled to resume on Monday, according to GM.
Consulting firm AlixPartners estimates that the shortage of chips will reduce revenues for the global auto industry by $ 60.6 billion.
GM said it expects to earn $ 10,000 to $ 11 billion, or $ 4.50 to $ 5.25 per share, in pre-tax adjusted profits this year. It projects an adjusted free cash flow of $ 1,000 to $ 2 billion for its automotive division in 2021. Forecasts take into account the potential impact of chip shortages, including a $ 1.5 billion success in $ 2.5 billion in its free cash flow.
GM chief financial officer Paul Jacobson said last week that he was “increasingly confident” that the carmaker would meet its earnings targets for the year despite plant closures.