Chip shortage halts 5 Stellantis plants as Suez trade blockage looms on horizon
A global shortage of microchips is halting production at five Stellantis NV plants in North America, including in Warren and Windsor, just as more supply issues potentially loom for the auto industry as a massive ship bloc theks Suez Canal in Egypt.
Starting Monday, the Stellantis plants will stop producing Jeep Cherokee and Compass SUVs, Ram 1500 Classic pickups and other Chrysler and Dodge vehicles through early to mid-April, according to the transatlantic automaker, which called the challenges "unprecedented."
Other locations impacted include Belvidere, Illinois; Brampton, Ontario; and Toluca, Mexico. Altogether, the five factories employ more than 18,500 hourly and salaried employees.
"Stellantis continues to work closely with our suppliers to mitigate the manufacturing impacts caused by the various supply chain issues facing our industry," spokeswoman Jodi Tinson said in a statement.
The insufficient supply of semiconductors used for automated driving functions, heated seats, infotainment systems and more in automobiles — as well as in consumer electronics — has shuttered auto plants for weeks and, in some cases, months without an easy solution.
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And now the Ever Given, a container ship longer than the Eiffel Tower that ran aground on Tuesday in the southern part of the Suez Canal, is stuck across the key international trade waterway despite efforts to release it. It is blocking passage of hundreds of other vessels.
"While parts and vehicles are moving through the Suez, the effect on the vehicle production can’t be measured at this point," Sam Fiorani, vice president of global forecasting for AutoForecast Solution LLC, said in an email, noting the situation has the potential to affect the industry for weeks.
"Many parts traveling through the canal could be resourced in the short-term with alternative, and more expensive, shipping methods. However, if the Ever Given is not dislodged soon, the costs will soar for the delayed parts and production could be slowed."
For now, too few microchips remain a battle for automakers. Stellantis had been producing its previous-generation, full-size Ram pickups in Warren as well as in Saltillo, Mexico, without the chips, holding them until more semiconductors become available.
Now, all production in Warren is halting through mid-April. The plant has not yet launched Jeep's new Wagoneer and Grand Wagoneer SUVs, high-profile revivals that are supposed to launch in the second quarter.
Stellantis had shut down Windsor for three weeks in February because of the shortage, and it will be down for another four, according to a post on Facebook by Local 444 of Canadian labor union Unifor. The plant produces the Chrysler Pacifica as well as the Chrysler Voyager, which is branded the Dodge Grand Caravan in Canada.
The other plants also previously had some downtime due to the chip shortage. Belvidere's Jeep Cherokee was down for a week last month. Brampton produces the Dodge Challenger and Charger muscle cars as well as the Chrysler 300 sedan. The restart of Jeep Compass production at Toluca also had been delayed last month.
The supply constraint began in late 2020 after the COVID-19 pandemic shifted chip production to surging tech orders while automakers idled their plants. When consumer demand for automobiles came roaring back, most of the industry was scrambling for supply — a problem that could continue late into the year.
Last month, General Motors Co. said the shortage could hurt 2021 earnings by $1.5 to $2 billion, though it is working to protect profit-rich full-size truck and SUV production.
The Detroit automaker is halting production for the next two weeks starting Monday at its Chevrolet Colorado and GMC Canyon midsize truck plant in Missouri. GM also extended downtime through the week of April 12 at its Lansing Grand River plant where the Chevrolet Camaro and Cadillac CT4 and CT5 are built. Production has been down there since March 15. Other plants in Kansas, Mexico and Brazil also have scheduled downtime.
Ford Motor Co. previously predicted a $1 billion to $2.5 billion hit to adjusted pre-tax earnings this year. The Dearborn automaker said its Dearborn Truck Plant producing its popular F-150 full-size trucks will be down Friday through Sunday. Other plants in Ohio, Kentucky and Kansas also have been affected.
A chip shortage and trade blockage in Egypt aren't the only challenges for automakers either. A severe winter storm caused a shortage of petrochemicals, disrupting some U.S. Toyota Motor Corp. production. Meanwhile, most of Honda Motor Co.'s North American production is affected this week and some next week as the Japanese automaker manages "the impact from COVID-19, congestion at various ports, the microchip shortage and severe winter weather."
Staff Writers Jordyn Grzelewski and Kalea Hall contributed.