General Motors said Thursday it is now able to increase vehicle deliveries to its dealers and customers in the United States and Canada despite a massive shortage of semiconductor chips, and that means most of its U.S. assembly plants will not take traditional summer shutdown.
Shipments of Chevrolet Colorado and GMC Canyon midsize pickups built at Wentzville Assembly in Missouri will increase by about 30,000 total units through the week of July 5. Other vehicles are expected to see more deliveries to dealers soon, too.
GM said it is increasing production of the Chevrolet Silverado heavy duty and GMC Sierra Heavy-duty full-size pickups at Flint Assembly by about 1,000 pickups per month beginning in mid-July.
GM said it is able to do this, despite an ongoing shortage of semiconductor chips used in car parts including electrical systems, because the employees at Flint Assembly have come up with ways to improve efficiency on the production line.
“The global semiconductor shortage remains complex and very fluid, but the speed, agility and commitment of our team, including our dealers, has helped us find creative ways to satisfy customers,” said Phil Kienle, GM vice president of North America Manufacturing and Labor Relations. “Customer demand continues to be very strong, and GM’s engineering, supply chain and manufacturing teams have done a remarkable job maximizing production of high-demand and capacity-constrained vehicles.”
‘Help is on the way’
Demand for the chips, which are made mainly by a few big suppliers in Taiwan, has been strong in part because of COVID-19 supply chain disruptions and an increased use of laptop computers, 5G phones and other IT equipment that also use the chips.
GM has started to complete production on the thousands of midsize pickups that were partly built and held for parts that required semiconductor chip parts.
To be clear, GM said this means does not mean it found a bunch of chips. Rather, it is reflective of GM’s process known as “build shy,” which means building as much of its vehicles as it can, less the chips.
GM has been storing tens of thousands of incompletely built pickups, SUVs and vans in Michigan, Indiana, Illinois, Missouri, Texas and Mexico.
For example, GM has parked thousands of incomplete SUVs from its Lansing Delta Township plant at a parking lot it leased from Michigan State University until the parts with chips arrive to finish the cars and ship them.
“This was the intended plan all along,” said David Caldwell, GM spokesman. “But the way we managed the supply and shortage was, we set aside those vehicles and with weeks and months of planning, we accounted for when they’d be updated and shipped. We’re telling our dealers now that help is on the way.”
No summer downtime
Smaller volumes of vehicles held at other plants also will be completed with semiconductor chip parts. They will ship to dealers during June and July. Caldwell said, without providing specifics.
Most U.S. assembly plants that build GM’s most in-demand, highly profitable products will not take any dedicated vacation downtime this summer, said Caldwell. Fairfax Assembly in Kansas, where GM builds the Chevrolet Malibu sedan and Cadillac XT4 SUV, remains down due to the chip shortage as is CAMI in Canada, Caldwell said.
In May, GM said it will return full-size light-duty pickup production to Oshawa Assembly in Canada during the fourth quarter. GM said that Oshawa will begin hiring some 1,700 people at the plant “soon.” It will bring new workers on sooner than expected allowing for a faster start of production, Caldwell said. That accelerated timeline and incremental volume will make an impact in 2022, as production ramps up.
Beyond GM’s ongoing efforts to prioritize semiconductor usage, its success engineering solutions hasallowed it to maximize the utilization of chips to pull ahead some projected semiconductor deliveries into the second quarter.
GM said it now expects its first-half financial results to be “significantly better than the first-half guidance previously provided.”
GM will share additional information during its second-quarter earnings conference call on Aug. 4.