GM extends production cuts due to chip shortage
General Motors announced on Wednesday it would be extending the vehicle production cuts further at three plants in North America and adding a fourth to the list of factories hit by the global shortage in semiconductor chips.
The company is confident that the extended cuts will not affect its already negative forecasts calling for 2021 earnings to drop by $2bn as a result of the shortage, reported Reuters.
GM's chief financial officer Paul Jacobson expected chip supplies to return to normal rates by the second half of the year.
“GM continues to leverage every available semiconductor to build and ship our most popular and in-demand products, including full-size trucks and SUVs,” company spokesman David Barnas said. “We contemplated this downtime when we discussed our outlook for 2021.”
The vehicle manufacturer also said on Wednesday that it would extend downtime at plants in Fairfax, Kansas, and Ingersoll, Ontario, until at least mid-April, and in San Luis Potosi, Mexico, through the end of March. In addition, it will idle its Gravatai plant in Sao Paulo, Brazil, in April and May.
According to reports, forecasting firm AutoForecast Solutions estimated GM could lose more than 216,000 units globally due to the shortage.
GM is but one of the many carmakers which announced that their production lines were affected by the chip shortage as the sector competes with consumer electronics manufacturers for the existing chips.
Ford Motor said in February that the lack of chips could cut the company's production by up to 20% in the first quarter, hitting its profits by as much as $2.5bn in the process.
Last week, President Joe Biden said he would seek $37bn in funding to boost chip manufacturing in the United States.