Line workers will work on the chassis of full-size General Motors pickup trucks at the Flint Assembly plant on June 12, 2019 in Flint, Michigan.
JEFF KOWALSKY / AFP / Getty Images
General Motors is cutting overtime this weekend at two US assembly plants making its highly profitable full-size pickups due to the ongoing semiconductor chip shortage affecting the global auto industry.
The factories in Flint, Michigan, and Fort Wayne, Indiana, produce a mix of the company’s full-size pickups, including the Chevrolet Silverado and GMC Sierra 1500 models and their bigger siblings.
This is the first time the Detroit auto maker has scaled down production services for its full-size pickups due to a month’s shortage of chips. GM has significantly reduced production at its auto and crossover plants in North America to prioritize chips for the company’s pickups and large SUVs.
In total, GM eliminates three hours of overtime between the two plants on Saturday and Sunday.
“As we continue to manage the impact of semiconductors on our factories, we are balancing parts availability with our ability to operate efficiently throughout the week,” GM said in an emailed statement.
GM also manufactures the 1500 versions of the Silverado and Sierra pickup at a factory in Mexico.
In addition to shift stoppages, GM said on Friday that it is canceling the planned shutdown for the weeks of June 28 and July 5 at all plants in the US except a mid-sized truck plant in Missouri. GM hopes production during those weeks, traditionally known as a summer shutdown period, will help make up for lost production from the first half of the year.
The changes come a day after GM and Ford Motor announced plans to temporarily shut down or extend the shutdown 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 the automotive industry and are used, among other things, in infotainment, power steering and braking systems. With several factories closed last year due to Covid, suppliers sent semiconductors away from automakers to other industries, creating a shortage after consumer demand returned stronger than expected. The auto parts can contain different sizes and different types of chips.
GM and Ford have been prioritizing the assembly of high-margin vehicles, such as full-size pickups, for months by cutting production of cars and crossovers. The companies even partially build pick-ups to complete and ship at a later date.
GM expects the chip shortage to reduce its operating profit by $ 1.5 billion to $ 2 billion this year, while Ford said the situation could cut its revenues by $ 1 billion to $ 2.5 billion by 2021.
Consulting firm AlixPartners estimates that the chip shortage will reduce $ 60.6 billion in revenues from the global auto industry this year.