GM cut production at its Arlington, Texas assembly plant due to the winter weather ravaging the U.S.
Harsh winter weather halted assembly lines across the United States this week even as analysts cautioned shortages of semiconductors could force manufacturers to reduce production by 1 million units in first half of 2021 and warning the problem could persist into the third quarter.
As the winter storms raged from the upper Midwest into the southwestern U.S., General Motors and Ford reported they halted production of some of their most valuable vehicles in the face of the weather.
GM cut production earlier this week at full-size SUV plant in Arlington, Texas, the pickup truck plant in Fort Wayne, Indiana, the crossover plant in Spring Hill, Tennessee and the Corvette plant in Bowling Green, Kentucky, due to the cold weather, officials confirmed.
Semiconductor shortage wreaks havoc
The shortage of semiconductors also forced the shutdown GM assembly plants in Ingersoll, Ontario and Fairfax, Kansas until mid-March, according to GM spokesman David Barnas.
Ford plans to resume production at several sites, including Dearborn Truck.
Stelllantis also closed its assembly plant in Windsor, Ontario due to the semiconductor shortage.
After weather delays, Ford planned to restart operations at plants in Chicago, Illinois, Dearborn Truck Plant and the assembly plant in Oakville, Ontario, spokeswoman Kelli Felker.
Winter weather forces shut downs
However, Ford plants in Flat Rock, Michigan; Avon Lake, Ohio; and Hermisillo, Mexico closed due to weather-related problems. Ford’s truck assembly plant in Kansas City, Missouri is closed until Feb. 22, due to unseasonably cold temperatures.
“Ford was warned that the availability of natural gas could be restricted in the Kansas City area in the coming days. To ensure we minimize our use of natural gas that is critical to heat people’s homes, we decided to cancel operations for a week,” Felker said.
Automaker profits expected to take hit
Meanwhile, the impact of the semiconductor shortage also hitting the industry continues to grow.
GM CFO Paul Jacobson expects the company will take a $1.5 billion to $2 billion hit to adjusted EBIT due to the ongoing semiconductor issue.
A new analysis from IHS Markit warns that the industry could lose up to 1 million units of production worldwide due to the shortages that were created when carmakers let contracts lapse and the semiconductors were snapped up by company’s making consumer electronics.
GM and Ford have acknowledged they are facing major reductions in profits this year due to the shortages of semiconductors for key models.
The IHS report said, “Overall, the global light vehicle production volume at risk has risen to nearly a million units for the first quarter.”
Even at this level, IHS said it expected the majority of the volume lost in the first quarter, displaced to later in the year, rather than an absolute reduction to the 2021 calendar year forecast.
“However, as we move closer to the million-unit mark and as plants building high-demand programs are brought into the mix, it could become more challenging to entirely offset production losses within the calendar year,” the new report noted.
