Ford and GM are both temporarily shutting down production

General Motors Corp (NYSE: GM) and Ford Motor (NYSE: F) have announced that they will extend or temporarily shut down various plants in North America due to the ongoing chip shortages affecting the global automotive industry. The temporary closings at General Motors will last from a week to several weeks for plants that have shut down because of the semiconductor chip failure. After closing the plant in Missouri for two weeks due to a lack of parts, GM will now resume production of medium-sized pickups on Monday. On the flip side, Ford's updated plans include additional downtime at two plants in Missouri and Illinois in the coming week, with the Fiat Rock assembly plant in Michigan closing for a week starting Monday. The vehicle productions affected include Ford Mustang, Lincoln Aviator SUVs, Ford Explorer and Transit Vans. It's important to understand that semiconductor chips are critical components of braking systems, infotainment, and power steering. The shutdown of several plans last year due to COVID-19 resulted in suppliers diverting semiconductors from automakers to other areas. This led to a shortage as consumer demand rose again faster than expected. According to the consulting firm AlixPartners, the interruption in chip production will result in a $ 60.6 billion drop in automotive sales this year. Last week, Ford announced production cuts at six of its locations, including plants that produce the famous F-150 pickup truck. Ford previously canceled overtime shifts at its Chicago plants that make SUVs and the Kansas City plant that makes vans, but production hasn't stopped. Similarly, the company says it will cut production at the Ohio assembly plant that makes chassis cabs and large trucks. The company had indicated that it expected the chip shortage to cut its revenues by $ 1- $ 2.5 billion this year. Ford will provide an update on the financial impact of the chip shortage when the company releases its first quarter results later this month.