Line workers are working on the full-size chassis of the General Motors pickup at the Flint Assembly plant on June 12, 2019 in Flint, Michigan.
JEFF KOWALSKY / AFP / Getty Images
General Motors this weekend is cutting overtime production at two U.S. assembly plants that produce their highly profitable full-size pickups due to the constant shortage of semiconductor chips affecting the global automotive industry.
The plants in Flint, Michigan and Fort Wayne, Indiana, produce a mix of the company’s compact pickups, including the Chevrolet Silverado and GMC Sierra 1500 models, as well as older siblings.
This is the first time that a car manufacturer from Detroit has reduced shifts in the production of its full-size pickups due to a lack of chips for several months. GM has significantly reduced its production plant for cars and switches in North America to give preference to pickup chips as well as company full-size SUVs.
In total, GM is removing three overtime shifts between the two factories on Saturday and Sunday.
“As we continue to manage the impact of semiconductors on our plants, we balance the availability of parts with our ability to operate efficiently throughout the week,” GM said in an email.
GM also produces 1,500 versions of the Silverado and Sierra pickups at a plant in Mexico.
In addition to cutting shifts, GM said Friday it was canceling a scheduled downtime in the weeks of June 28 and July 5 at all U.S. plants except at the Missouri medium-sized truck plant. GM hopes production during those weeks, traditionally known as the summer shutdown period, will help make up for lost production from the first half of the year.
GM CEO Mary Barra and Ford CEO Jim Farley are expected to attend Monday at virtual summit of CEOs with the Biden administration to discuss global semiconductor shortages.
Semiconductors are key components in automotive manufacturing and, among other things, are used in entertainment systems, power steering and brakes. As more plants closed last year due Covid, suppliers steered semiconductors away from carmakers to other industries, creating shortages after consumer demand returned stronger than expected. Car parts can contain several sizes and different types of chips.
For months, GM and Ford have given priority to assemblyf high margin vehicles such as full-size pickups by cutting car and crossover production. Companies are even partially building pickups to complete them and ship later.
GM expects that the lack of chips will reduce its operating profit by 1.5 to 2 billion this year, while Ford said that the situation could reduce its earnings by one billion to 2.5 billion in 2021.
Consulting firm AlixPartners estimates that chip shortages will be reduced $ 60.6 billion in revenue from the global automotive industry this year.