General Motors announced this week that it will soon be restarting four North American factories that had been inactive for much of the past four months due to the global shortage of computer chips.
The announcement comes after the company and other automakers spent much of the past few months announcing that they were idling factories and slowing production because they couldn’t get enough small. parts, which are essential not only for cars, but also for electronics, appliances and many other goods.
The automaker said it plans to restart production of the Chevrolet Camaro on June 21, earlier than expected, at its plant in Lansing Grand River, Michigan. The factory has been inactive since February 5. Production of the Cadillac CT4 and CT5 sedans will restart a week later.
A Canadian plant that makes the Chevrolet Equinox sport utility vehicle will resume operations on June 14 and end on July 2, when it will begin a normal two-week summer shutdown. The factory, known as CAMI Assembly, has been closed since February 8.
Two SUV factories in Mexico will restart on Monday. These include a plant in San Luis Potosi that makes the Equinox and the GMC Terrain, and another in Ramos Arizpe that makes the Equinox and the Chevy Blazer.
Full production is also expected to resume by the end of May at two GM plants in South Korea. The Bupyeong 1 plant has been operating at 50% capacity since the end of April, while the Changwon assembly plant will also add a second shift.
GM said the semiconductor shortage will cut pre-tax profit this year by $ 1.5 billion to $ 2 billion. He made a net profit of $ 3 billion in the first quarter, but only expects to earn $ 500 million in the second.
The company appears to be getting over the shortage with fewer problems than Ford Motor Company, which said the lack of chips could cut production to half the number of vehicles in the second quarter as it had previously predicted.
The semiconductor shortage is teaching the industry a painful new lesson in what it takes to build a car.
For most of its history, the industry has relied on a distinct approach to purchasing auto parts, sourcing components from suppliers when they need them. It’s called just-in-time manufacturing and is designed to streamline production and eliminate the costs of stocking warehouses with parts waiting to be used.
But the shortcomings of this system were made clear this year as automakers faced a shortage of chips they needed to incorporate advanced functions into their vehicles and found themselves at the bottom of chipmaker customer lists in China. because of their just-in-time approach. .
This shortage threatens to cut industry sales by $ 110 billion and is forcing automakers to rethink how they get the electronic components that have become essential to contemporary automotive design.
“Customers have to change,” said Hassane El-Khoury, CEO of ON Semiconductor Corp., which derives more than a third of its revenue from the automotive market. “This just-in-time mindset is not working.”
Semiconductor manufacturers demand long-term guaranteed orders rather than the short-term flexibility that automakers are used to. The assertiveness of chipmakers, even under pressure from lawmakers, underscores the rebalancing of power from companies whose logos are on cars to those who provide the cutting edge technology that makes them run.
As these components play a bigger role in everything from in-car entertainment to autonomous driving functions, chipmakers say they are ready to invest in expanding production to avoid a repeat of recent shortages – if automakers give them away. orders that may not be canceled and enter into long term agreements.
“Why would I invest a single dollar when my client can cancel within 30 days and it takes me two years to build capacity?” Said El-Khoury.
There are signs that the industry is listening. Ford CEO Jim Farley last week signaled a new desire to reverse decades of parts outsourcing.
“As the industry evolves, we need to source our supplies now, just as we acquired powertrains in the 1920s and 1930s,” said Farley, who has closed half of its factories and seen the batches of its dealers are empty because of a shortage of chips.
Information for this article was provided by Neal E. Boudette of the New York Times and Ian King and Keith Naughton of Bloomberg News (WPNS).