GM to idle 3 plants until March for deepening microchip shortage

Kalea Hall
The Detroit News

Detroit — General Motors Co. said the three plants it shut down this week because of a deepening microchip shortage hammering the global auto industry will remain closed through at least mid-March

GM has halted production at the Fairfax, Kansas, plant where the Cadillac XT4 and the Chevrolet Malibu are built, the CAMI plant in Ontario where the Chevrolet Equinox is built, and the San Luis Potosi plant in Mexico where the Equinox, the Chevrolet Trax and the GMC Terrain SUVs are built.

GM said Tuesday it is "extending downtime at those plants and will reassess in mid-March." The automaker didn't previously give a return-to-work date for the plants affected when it said last week production would be down the week of Feb. 8. 

"Our intent is to make up as much production lost at these plants as possible," GM said in a statement, one day before the Detroit automaker is set to report fourth-quarter and full-year 2020 financial results.  

The semiconductor shortage affecting the entire industry is expected to last through at least the end of the second quarter, analysts say, potentially impacting operating results, white-collar bonuses and profit-sharing payouts to union-represented employees come this time next year.

For now, no other North American GM plants have been shut down. But the automaker now intends to build some vehicles without certain modules and then complete them later:  "When there is a shortage of semiconductors that impacts production, in some cases we intend to build vehicles without certain modules and will complete them as soon as possible," GM said in a statement.

GM already started to do this at its Wentzville, Missouri, plant where mid-size trucks and full-size vans are built, and at the Ramos Arizpe assembly plant in Mexico where the Equinox and Trax are built. 

The automaker is trying to protect its profit-rich large SUV and pickup truck plants from being affected since demand for those products is high.

GM spokesman David Barnas said the automaker currently is not building trucks without the modules. But a plant communication for Fort Wayne Assembly employees obtained by The Detroit News said the plant eventually would build some light-duty trucks without them.

"As GM continues to manage the parts supply issues caused by the global shortage of semiconductors, [Fort Wayne Assembly] will adjust our build mix over the next few weeks," Gary Duff, the plant executive director wrote in the communication.

"We will build some vehicles without certain modules and will complete them as soon as possible. This will help us quickly meet strong customer demand as more semiconductors become available and minimize the impact on employees."

GM isn't alone in battling the chip shortage.

Ford Motor Co. is operating its Dearborn Truck Plant and Kansas City Assembly where F-150s are built on reduced shifts this week because of the global shortage. Last week, the Dearborn automaker reported that it could see between a $1 billion and $2.5 billion hit to its annual earnings as a result of chip-related production losses this year. 

During a discussion with J.P. Morgan Securities Tuesday, Hau Thai-Tang, Ford's chief product platform and operations officer, said: "It's a very fluid situation. We know that through many channels of advocacy we are seeing that the wafer manufacturers are increasing their allocation towards automotive, and also adding incremental capacity.

"Given the very long lead time in this particular commodity, we anticipate that we'll start to see some relief in the second quarter. And then, hopefully ... give us some ability to recover in the back half. But it's still early days yet."

Twitter: @bykaleahall