GM cuts overtime at two US truck plants due to chip shortages
Line workers work on the chassis of full-size General Motors pickups at the Flint Assembly facility in Flint, Michigan on June 12, 2019.
JEFF KOWALSKY / AFP / Getty Images
General Motors this weekend is cutting overtime production at two U.S. assembly plants that are making highly profitable full-size pickups due to the ongoing shortage of semiconductor chips affecting the global auto industry.
The plants in Flint, Michigan and Fort Wayne, Indiana make a mix of full-size pickups, including the Chevrolet Silverado and GMC Sierra 1500 and their larger siblings.
This is the first time the Detroit automaker has cut production delays on its full-size pickups due to months of chip shortages. GM has significantly reduced production at its auto and crossover plants in North America to give priority to chips for the company’s pickups and full-size SUVs.
In total, GM eliminated three hours of overtime between the two plants on Saturday and Sunday.
“As we continue to control the impact of semiconductors on our assets, we balance availability of parts with our ability to operate efficiently throughout the week,” GM said in a statement it emailed.
GM also produces the 1500 versions of the Silverado and Sierra pickups at a plant in Mexico.
In addition to the shift cuts, GM said Friday that scheduled downtime for the weeks of June 28 and July 5 will be canceled at all US plants except one midsize truck plant in Missouri. GM hopes that production during these weeks, traditionally referred to as summer downtime, will help make up for lost production starting in the first half of the year.
The changes come a day after GM and Ford Motor announced plans to temporarily shut down or extend downtimes at several plants in North America.
GM CEO Mary Barra and Ford CEO Jim Farley are expected to attend a virtual CEO summit with the Biden administration on Monday to discuss the global semiconductor shortage.
Semiconductors are key components in automotive engineering and are used in, among other things, infotainment, power steering and braking systems. When several plants closed due to Covid last year, suppliers turned semiconductors away from automakers and into other industries, creating a shortage after consumer demand fell more than expected. The auto parts may contain different sizes and different types of chips.
For months, GM and Ford have been prioritizing the assembly of high-margin vehicles like full-size pickups by reducing the production of cars and crossovers. The companies even partially build pickups in order to finish and ship them at a later date.
GM predicts the chip shortage will cut operating profits by $ 1.5 billion to $ 2 billion this year, while Ford said the situation could cut profits by $ 1 to 2.5 billion by 2021.
Consulting firm AlixPartners estimates the chip shortage will reduce global auto industry sales by $ 60.6 billion this year.