The recent news from the Biden administration about its plans to alleviate the semiconductor shortage isn’t helping General Motors or Ford today as the company announced more production cuts.
GM extended its shutdown of the Lansing (Michigan) Grand River plant until April 26, which would put it at six weeks since the last time it produced a vehicle. The company’s Spring Hill, Tennessee facility is going to shut down for two weeks beginning April 12.
The Detroit-based company’s shifted its available resources to ensure production of its highly profitable pickups and SUVs continues unaffected. Thus far, it’s not been forced to idle any production of those vehicles due to chip shortages. They were affected by the winter storms that hammered Texas and other parts of the country last month.
In addition to the just mentioned closures, CNBC.com reported, GM said the Lansing Delta plant that produces the Chevrolet Traverse and Buick Enclave near Lansing, Michigan will be down the week of April 19. Chevrolet Blazer will also be on hiatus at the Ramos Arizpe plant in Mexico that same week.
The company also added time to the shutdowns at plants in Kansas and Canada that produce cars and crossovers through mid-May. They produce the Chevrolet Malibu sedan and Equinox and Cadillac XT4 crossover.
Ford is also cutting more production, starting with tis Chicago Assembly Plant, Flat Rock (Michigan) Assembly Plant and part of its Kansas City facility next week. Ford plans, according to Reuters, to run during its traditional shut down periods this summer to help make up for lost production.
Not that it’s any consolation but it’s not just high-volume producers being impacted. Porsche officials said they may have to slow production numbers to account for the scarcity of semiconductors, according to German publication Handelsblatt.
Closures mean big money
Paul Jacobson, GM’s new chief financial officer, said the company expected to take a $1.5 billion to $2 billion hit to adjusted EBIT due to the semiconductor issue. He noted the shortfall in parts to be temporary and that it won’t impact any long-term plans or programs.
However, that was in February during the company’s earnings call. There’s not been a formal revision of that estimate beyond the $2 billion number since then. Ford officials offered up a similar estimate earlier this year.
The Biden administration is scrambling to find ways to assist automakers. Part of that effort includes a meeting with The White House Monday, which is expected to GM Chief Executive Mary Barra and Ford Chief Executive Jim Farley plus leaders in the technology arena, according to Reuters.
The Alliance for Automotive Innovation implored the administration to take action to ensure this doesn’t happen again. In the meantime, the shortage could cost the auto industry 1.28 million vehicles with slowdowns and shutdowns expected to last through the end of summer — at least.
President Joe Biden is pushing for at least $37 billion for legislation to help boost U.S. semiconductor production. While encouraging, it fails to resolve today’s issues. He also directed federal agencies to try to resolve or at least blunt the impact of the shortage in February.