General Motors and Ford Motors have confirmed that the companies are temporarily shutting down production or extending the shutdown at several plants in North America because of the ongoing chip shortage.
General Motors plant closures range from a week or two to several weeks for plans that are already shut down temporarily due to the parts disruption. Next week, the company plans to restart the production of midsize pickups after it was halted for about two weeks.
On the other hand, Ford has updated its timeline to include additional downtime at two of its plans in Illinois and Missouri through next week. It is also shutting down its Flat Rock Assembly plant in Michigan for a week, starting from Monday. With these new changes, the vehicles impacted include Explorer, Lincoln Aviator SUVs, Ford Mustang, and Transit Vans.
Semiconductor materials are key components used in the vehicle’s infotainment as well as power steering and braking system among others. Automakers are facing issues related to the supply of semiconductor components as several plans have been impacted due to the COVID-19 pandemic while demand is on the rise.
Ford had previously said that the company expects chip shortage to lower its earnings by $1 billion to $2.5 billion in 2021. On the other hand, General Motors is expected to earn $10 billion to $11 billion this year. This forecast factors in the potential impact of the chip shortage, including a hit of $1.5 billion to $2.5 billion to its free cash flow.
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