Line workers are working on June 12, 2019 in Flint, Michigan, on the chassis of General Motors pickups at the Flint Assembly plant.
JEFF KOWALSKY / AFP / Getty Images
Over the weekend, General Motors is cutting back on overtime production at two U.S. assembly plants making its lucrative full-size pickups due to the continuing shortage of semiconductor chips affecting the global automotive industry.
The plants in Flint, Michigan and Fort Wayne, Indiana, deliver a mix of the company’s full-size pickups, including the Chevrolet Silverado and GMC Sierra 1500 models, as well as their bigger siblings.
This is the first time the Detroit automaker has cut production shifts for its full-size pickups due to the month-long discs. GM has significantly reduced production at its car and crossover plants in North America to prioritize discs for the pickups as well as the company’s full-size SUVs.
In total, GM eliminated three overtime shifts between the two plants on Saturday and Sunday.
“As we manage the semiconductor impact on our plants, we balance the availability of parts with our ability to operate efficiently throughout the week,” GM said in an email.
GM also manufactures the 1500 versions of the Silverado and Sierra pickup at a factory in Mexico.
In addition to the shift reductions, GM said Friday it will cancel the shutdown in the weeks of June 28 and July 5 at all U.S. plants except a medium-sized truck plant in Missouri. GM hopes that production during the weeks, traditionally called a summer shutdown period, will help pick up lost production in the first half of the year.
The changes come a day after GM and Ford Motor announced plans to temporarily idle or extend the shutdown at several plants in North America.
GM CEO Mary Barra and CEO Jim Farley are expected to attend a virtual CEO summit with the Biden administration on Monday to discuss the global shortage of semiconductors.
Semiconductors are key components in automotive manufacturing and are used in infotainment, power steering and braking systems, among others. As several plants closed last year due to Covid, suppliers have targeted semiconductors from automakers to other industries, creating a shortage after consumer demand fell more sharply than expected. The car parts can contain different sizes and different types of chips.
GM and Ford have been giving preference to the collection of high-margin vehicles, such as full-size pickups, for months by reducing the production of cars and crossovers. The companies are even partially building pickups to complete later.
GM expects the chip shortage to reduce its operating profit this year by $ 1.5 billion to $ 2 billion, while Ford said the situation could reduce its earnings by $ 1 billion to $ 2.5 billion in 2021.
Consulting firm AlixPartners estimates that the chip shortage this year will cut $ 60.6 billion in revenue from the global automotive industry.