Chip shortage appears to be easing as GM set to restart idled plants

Globally, estimates pegged automotive light vehicle production decreases of up to 3.9 million units due to the shortage of semiconductor chips. In a bit of good news, General Motors announced that four of their idled plants would resume production in the next month. 

This week, GM is expecting to restart the San Luis Potosi Assembly plant in Mexico where the Chevrolet Equinox and GMC Terrain are built after being idled for two weeks. Mexico’s Ramos Assembly plant is also restarting where the Blazer and Equinox are produced – a plant that has been idled since May 3.

The longest-lasting shutdown has been at the CAMI Assembly plant in Ontario, also an Equinox producer. Closed since Feb 8, it was expected to remain idled until June 28 but will instead restart on June 14. A two-week summer shutdown is still scheduled starting July 2.

The Lansing Grand River Assembly Plant is tentatively scheduled to restart production of the Camaro on June 21. The plant also assembled Cadillac’s CT models which have not been scheduled to restart yet. 

GM spokesperson David Barnas wrote in an email, “Given the June 21 restart date is still a few weeks away, we’re still in the process of evaluating and will have more information in the coming weeks once we complete our assessment.”

Barnas also mentioned, “Given the ongoing shortage of semiconductors that’s impacting all industries around the world, we look at a number of factors when making allocation decisions across our global operations and vehicle lines. But clearly, our supply chain organization continues to make strides working with our supply base to mitigate the near-term impacts of the semiconductor situation.” 

Cautious optimism for replenished stock 

General Motors might be first to make the announcement, but the industry as a whole is looking for enough chips to restart fully. It’s still expected that the resultant lack of inventory will cost the industry around $110 billion in lost revenue. 

With GM’s announcement of plants reopening ahead of schedule, there’s hope that assembly plants will soon begin to ship vehicles to dealer lots that are increasingly bare. That’s still weeks away, if not months.

Sam Fiorani is the vice president of global vehicle forecasting at AutoForecast Solutions. He said, “When this whole thing blew up in the first quarter, everybody said it would take four to six months to get a factory capable of making these chips ready, so that takes us to the third quarter, which is where everybody’s targeting. We’re just looking for confirmation that a proper supply of chips has been located for everybody, or for anybody for that matter.” 

Redirecting chip production back to automotive 

World leaders including President Joe Biden have implemented task forces to get chip production back to full capacity. The shortage was due in large part initially to chip manufacturers redirecting their components to other markets that exploded in popularity when COVID-19 hit worldwide. That included increased demand for computers, tablets, smartphones, and other electronics that require microprocessor chips. The shortage became noticeable when the resilient auto industry picked up sooner than expected by anyone’s standard, and it was then compounded by a fire at the Renesas Electronics Corp plant in Japan on March 19. Renesas manufacturing resumed four weeks later. 

With other industries beginning to stabilize, not to mention government pressure, chip production is once again ramping up for automotive applications. It will take time to filter through the supply chain but at least some relief should be felt early in the third quarter.

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