General Motors employees work on the assembly line of the Fairfax Assembly & Stamping Plant in Kansas City, Kansas.
Jim Barcus for General Motors
DETROIT – General Motors extends temporary shutdowns in three of its North American plants due to a global shortage of semiconductor chips, which is expected to cut billions in revenues from automakers by 2021.
The decision to extend the shutdown at auto and crossover plants in Kansas, Mexico and Ontario, Canada is an effort to prioritize chips for the production of GM’s full-size pickup trucks and SUVs, the company said. Wednesday. GM also said the Gravatai plant in Brazil will be shut down in April and May.
GM previously said the North American factories would be closed until at least mid-March. The San Luis Potosi The plant in Mexico is now scheduled to close in late March, while plants in the US and Canada will be closed until at least mid-April.
The announcement comes a week after GM CFO Paul Jacobson said the chip shortage was on the decline, but the company still expected the delays to cut its free cash flow by $ 1.5 billion and $ 2.5 billion by 2021.
“GM will continue to use every semiconductor available to build and ship our most popular and in-demand products, including full-size trucks and SUVs for our customers,” the company said in a statement. “GM has not stopped or reduced shifts in any of its truck factories because of the shortage.”
Automakers and parts suppliers began warning of the shortage late last year, after vehicle demand recovered more strongly than expected after automakers were forced to shut down production last spring to help contain the coronavirus pandemic.
Consulting firm AlixPartners estimates that the chip shortage will reduce $ 60.6 billion in revenues from the global auto industry this year. That estimate spans the entire supply chain – from dealers and car manufacturers to large suppliers and their smaller counterparts.
Semiconductor chips are extremely important components of new vehicles for areas such as infotainment systems and more basic components such as power steering and brakes.
Depending on the vehicle and options, experts say a vehicle can have hundreds of semiconductors. Higher cars with advanced safety and infotainment systems have many more and different types of chips than a base model.