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GM Extends Plant Downtime Due to Extended Semiconductor Shortage

Feb. 10, 2021
The COVID-19 recovery of U.S. automakers is being threatened by a shortage of microchips.

On February 9, General Motors Co. announced that scheduled downtime at three of its plants would continue through to the middle of March as a sustained semiconductor shortage squeezes U.S. auto production. GM extended production downtime in three assembly plants in Fairfax, Kansas City; Ontario, Canada; and San Luis Potosí, Mexico.

According to GM, the company will extend the downtime for the rest of the month and reassess their options in the middle of March. In the meantime, the company plans to assemble vehicles without the relevant parts so they can be completed once the semiconductors become available.

“This will help us quickly meet strong customer demand as more semiconductors become available,” read a statement from GM, which went on to say the shortage would not effect the company’s overall performance or commitment to electrification.

The shortage of semiconductor microchips is a new hurdle in the way of automakers already struggling with chaotic post-COVID-19 supply chains. According to Fitch Ratings, part of the issue is related to increased demand for consumer electronics during the pandemic.

Scores of automakers in the U.S. and globally have seen production choked by the shortage. In January, Ford Motors announced it would idle production at a Louisville, Kentucky plant due to shortages. The company later also said the bottleneck was contributing to decreased output of its F-150 truck. FCA, Volkswagen, Daimler, Toyota, Nissan, and Subaru all also saw delayed production, decreased output, or cut shifts in factories due to lack of the critical supply.

On February 2, a group of 15 U.S. Senators, including 7 Republicans and 8 Democrats, wrote to the White House to ask President Biden to act against the shortage. The senators, including both senators from Ohio, Michigan, Indiana, and Illlinois, said the shortage of microchips “threatens our post-pandemic economic recovery, the consequences of which stand to be especially acute in dominant auto manufacturing states like ours.”

In the letter, the senators note that the National Defense Authorization Act could be used to boost existing and incentivize future domestic semiconductor manufacturing. “While this is not an immediate fix,” the senators wrote, “this engagement is also vital to maintain the competitive advantage of American auto manufacturing.”

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