General Motors is temporarily idling or extending shutdowns of several factories in North America due to a continuing 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 parts shortages.
The cost of the closures was factored into the company’s profit forecast for the year, according to GM. The automaker expects the problem to cut operating income from $ 1.5 billion to $ 2 billion this year.
“We continue to work closely with our supply base to find solutions to our suppliers’ semiconductor needs and to mitigate the impact on GM,” GM said in an emailed statement. “Our intention is to compensate as much as possible for the lost production in these factories.”
The automaker’s Spring Hill, Tennessee plant will close Saturday through April 23, according to a message from the United Auto Workers union obtained by CNBC. The plant builds the GMC Acadia and Cadillac XT5 and XT6 crossovers. GM confirmed the shutdown.
On top of that, GM said another crossover plant that produces the Chevrolet Traverse and Buick Enclave in Lansing, Mich., Will be inactive the week of April 19 and that production of the Chevrolet Blazer at a plant in Mexico will also be canceled that week.
The chip shortage could cost the global auto industry $ 60 billion this year.
The company is also extending downtime at factories in Kansas and Canada that produce cars and crossovers until mid-May. They produce the Chevrolet Malibu sedan and the Equinox and Cadillac XT4 crossover. Another plant in Lansing that produces the Chevrolet Camaro and Cadillac CT4 and CT5 also saw its downtime extended by two weeks until the first week of May.
For months, GM has been prioritizing the assembly of high-margin vehicles such as full-size pickup trucks by reducing production of cars and crossovers. The company even partially builds vans to be completed and shipped at a later date.
Semiconductors are key components used in infotainment, power steering and braking systems in new vehicles, among others. As several factories closed last year due to Covid-19, suppliers have diverted semiconductors from automakers to other industries, creating a shortage after consumer demand returned to stronger than expected.
Consulting firm Alix Partners estimates that the chip shortage will reduce more than $ 60 billion in revenue from the global auto industry this year.