General Motors Co (NYSE: GM) and Ford Motor Co (NYSE: F) said Thursday it will temporarily close more North American factories as persistent semiconductor chip shortages, which are affecting manufacturing for automakers from Detroit to Tokyo, worsen, the Washington Post reports.
What happened
According to the report, GM will halt production lines in Spring Hill, Tennessee, Delta Township, Michigan, and Ramos Arizpe, Mexico for 1-2 weeks. The automaker is also extending the closings that began in February and March at its plants in Lansing, Michigan, Kansas City, Kansas, and Ingersoll, Ontario.
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Ford plans to temporarily halt production lines in Chicago, Illinois, Kansas City, Missouri, and Flat Rock, Michigan next week and reduce production in Avon Lake, Ohio.
The temporary production stop at various GM plants, which manufacture Cadillacs and Buicks, among others, will affect 10,000 GM workers. Ford didn’t say how many workers will be affected.
According to GM, its unionized workers receive about 75% of their pay through a combination of unemployment benefits and benefits. While Ford’s full-time employees who have been with the company for more than a year receive around 75% of their gross wages during the weeks of absence.
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Why is it important
Ford and other automakers have focused on building their most profitable vehicles first, but the prolonged production stops suggest that the chip shortage is worsening.
The scarcity has already disrupted global supply chains, affecting automakers everywhere, including Tesla Inc (NASDAQ: TSLA), and it’s even known to be the tech giant’s manufacturing plans Apple Inc (NASDAQ: AAPL) for MacBooks and iPads.
Price action: GM shares closed 1.22% lower at $ 60.09 and Ford’s 1.73% lower at $ 12.51 on Thursday.
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