Engines assembled as they move through the assembly line at the General Motors (GM) manufacturing facility in Spring Hill, Tennessee, on August 22, 2019.
Harrison McClary | Reuters
DETROIT – General Motors is temporarily resting or shutting down at several plants in North America due to a continuing shortage of semiconductor chips affecting the global automotive industry.
The temporary plant ranges from a week or two to a few extra weeks for plants that are already diapered due to the interruption of the parts.
According to GM, the cost of the closures was taken into account in the company’s profit forecast. The carmaker expects the problem to reduce its operating profit by $ 1.5 billion to $ 2 billion this year.
“We continue to work closely with our offering to find solutions to suppliers’ semiconductor needs and to reduce the impact on GM,” GM said in an email. “We plan to record as much production as possible that is lost at these plants.”
Semiconductors include key components used in infotainment, power steering and braking systems. As several plants were shut down 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.
According to a message from the United Auto Workers union to CNBC, GM’s plant in Spring Hill, Tennessee will start from Saturday to April 23. The plant builds the GMC Acadia and Cadillac XT5 and XT6 crossovers. GM confirmed the strike.
In addition, GM said another crossover plant producing the Chevrolet Traverse and Buick Enclave near Lansing, Michigan, will be idle the week of April 19, and will also cancel production of the Chevrolet Blazer at a plant in Mexico that week word.
The company is also extending downtime at plants in Kansas and Canada that manufacture cars and intersections until mid-May. They manufacture the Chevrolet Malibu sedan and Equinox and Cadillac XT4 crossover. Another plant in Lansing, which manufactures the Chevrolet Camaro and Cadillac CT4 and CT5, has also had its standstill extended by two weeks to the first week of May.
For months, GM has preferred the collection of high-margin vehicles, such as full-size pickups, by reducing the production of cars and crossovers. The company is even partially building pickups to complete later.
GM had to reduce production of the Chevrolet Colorado and GMC Canyon pickups for two weeks. According to GM, production of the smaller trucks will resume on Monday.
Consulting firm AlixPartners estimates that the chip shortage this year will cut $ 60.6 billion in revenue from the global automotive industry.
GM has said it will earn between $ 10 billion and $ 11 billion, or $ 4.50 to $ 5.25 per share, in adjusted earnings before tax this year. It projects the adjusted free cash flow of $ 1 billion to $ 2 billion for its automotive division in 2021. The forecasts are the factor that includes the potential impact of the chip shortage, including a hit of $ 1.5 billion to $ 2.5 billion for its free cash flow.
GM chief financial officer Paul Jacobson said last week he was “increasingly confident” that the carmaker would meet its earnings targets for the year despite the plant’s closure.