General Motors Extend Production Holidays To Counter Global Semiconductor Crunch: CNBC

Anusuya Lahiri
·2 min read

  • General Motors Co (NYSE: GM) temporarily idled or extended production cuts at multiple North American factories in response to the global semiconductor chip crisis, CNBC reports.

  • The temporary plant shutdown could range from one to two weeks to multiple weeks for already idled plants. GM will restart production of midsize pickups on Monday after a two-week closure due to the Missouri plant crisis.

  • GM expects the closure to reduce its operating profit by $1.5 billion to $2 billion in 2021.

  • GM’s Spring Hill, Tennessee plant responsible for GMC Acadia and Cadillac XT5 and XT6 crossovers will close from Saturday through April 23.

  • Another crossover plant producing the Chevrolet Traverse and Buick Enclave near Lansing, Michigan, will be idled around the week of April 19. The Chevrolet Blazer production at a Mexico plant will be canceled during that week.

  • GM extended the downtime at the Kansas and Canada plants that produced the Chevrolet Malibu sedan and Equinox and Cadillac XT4 crossover. The company extended the downtime by two weeks to the first week of May for another Lansing plant that produced the Chevrolet Camaro, Cadillac CT4, and CT5.

  • GM had been prioritizing high-margin vehicle assembly, including full-size pickups, for months. The company is even partially building pickups slated for completion and shipment on a future date.

  • GM was forced to cut production of the Chevrolet Colorado and GMC Canyon midsize pickups for two weeks. It had planned to restart the production of the smaller trucks on Monday.

  • The chip crisis could hit the global automotive industry revenue by $60.6 billion in 2021.

  • GM expected to earn $10 billion to $11 billion, or $4.50 to $5.25 per share, in adjusted pre-tax profits for 2021. The company projected an adjusted free cash flow of $1 billion to $2 billion for its automotive division after incorporating a free cash flow hit between $1.5 billion to $2.5 billion.

  • Last week GM CFO Paul Jacobson reassured regarding the accomplishment of 2021 earnings targets despite the plant halts.

  • Price action: GM shares traded lower by 1.34% at $60.01 on the last check Thursday.

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