GM extending plant shutdowns at three plants due to chip shortage

General Motors is extending temporary shutdowns at three assembly plants through mid-March due to a global shortage of semiconductor chips.

The impacted plants are in Kansas; Ontario, Canada; and San Luis Potosí, Mexico. They produce the Chevrolet Malibu sedan and Buick Encore, Cadillac XT4, GMC Terrain, and Chevy Equinox and Trax crossovers.

The shutdowns, which were initially supposed to last through this week, will be reassessed in mid-March. They’re intended to ensure the company has enough semiconductor chips to produce its more profitable pickup trucks and SUVs.

“Semiconductor supply remains an issue that is facing the entire industry,” GM said in a statement. “GM’s plan is to leverage every available semiconductor to build and ship our most popular and in-demand products, including full-size trucks and SUVs and Corvettes for our customers.”

Cox Automotive says GM’s supplies of the Malibu and crossovers are higher than what the industry typically considers “healthy,” meaning the automaker can afford to cut production at the plants. 

Semiconductors are extremely important components of new vehicles for areas ranging from infotainment systems to more traditional parts such as power steering. They’re also used in consumer electronics.

Automakers and parts suppliers began warning of a semiconductor shortage late last year after demand for vehicles rebounded stronger than expected following a two-month shutdown of production plants last spring due to the coronavirus pandemic.

Ford Motor this week was forced to cut production of its highly profitable F-150 pickup trucks due to the chip shortage. The company said it was not able to prioritize production of the pickups because they use unique chips compared with other models.

Ford last week said the shortage could lower its earnings by $1 billion to $2.5 billion this year.