GM cuts overtime shifts at two U.S. truck plants due to chip shortage

Business


Line workers 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

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General Motors is cutting overtime production this weekend at two U.S. assembly plants that make its highly profitable full-size pickups due to the ongoing semiconductor chip shortage impacting the global automotive industry.

The plants 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 as well as their larger siblings.

This is the first time the Detroit automaker has cut production shifts for its full-size pickups due to the monthslong chip shortage. GM has significantly reduced production at its car and crossover plants in North America to prioritize chips for the pickups as well as the company’s full-size SUVs.

In total, GM is eliminating three overtime shifts between the two plants on Saturday and Sunday.

“As we continue to manage the semiconductor impact on our plants, we are balancing parts availability with our ability to run efficiently for the entire week,” GM said in an emailed statement.

GM also produces the 1500 versions of the Silverado and Sierra pickup at a plant in Mexico.

In addition to the shift cuts, GM said Friday it is canceling scheduled downtime the weeks of June 28 and July 5 at all U.S. plants except a midsize truck plant in Missouri. GM hopes production during those weeks, which is traditionally known as a summer shutdown period, will assist in making up lost production from the first half of the year.

The changes come a day after GM and Ford Motor announced plans to temporarily idle or extend shutdowns at several plants in North America.

GM CEO Mary Barra and Ford CEO Jim Farley are expected to take part Monday in a virtual CEO summit with the Biden administration to discuss the global semiconductor shortage.

Semiconductors are key components in automotive manufacturing and are used in infotainment, power steering and braking systems, among other things. As multiple plants shuttered last year due to Covid, suppliers directed semiconductors away from automakers to other industries, creating a shortage after consumer demand snapped back stronger than expected. The automobile parts can contain several sizes and different types of chips.

For months, GM and Ford have been prioritizing assembly of high-margin vehicles such as full-size pickups by cutting production of cars and crossovers. The companies are even partially building pickups to complete and ship at a later date.

GM expects the chip shortage will reduce its operating profit by $1.5 billion to $2 billion this year, while Ford said the situation could lower its earnings by $1 billion to $2.5 billion in 2021.

Consulting firm AlixPartners estimates the chip shortage will cut $60.6 billion in revenue from the global automotive industry this year.



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