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GM will make ‘substantial shifts’ in supply chain over chips By Reuters


© Reuters. FILE PHOTO: Mary Barra (CEO of General Motors) attends the Allen and Co. Sun Valley Media Conference in Sun Valley (Idaho), U.S.A, July 12, 2019. REUTERS/Brendan McDermid/File Photo

By David Shepardson

WASHINGTON (Reuters) – General Motors Co (NYSE:) Chief Executive Mary Barra said Friday the largest U.S. automaker plans to make changes in its supply chain as it works to address the continuing semiconductor chip crisis that has forced significant production cuts.

Barra told an interview online that “we’re going make some very substantial changes in our supply chain.” We’re already digging deeper into tiered supply bases because General Motors generally doesn’t purchase chips directly but our suppliers. We are now building relationships directly with manufacturers.

A GM spokesperson declined to provide further information about how the company may shift its supply chains.

Next week the White House will host a meeting with the U.S. Commerce Department to address the chip crisis. This has resulted in production cuts at automakers all over the world.

GM announced that it would be cutting six North American production plants because of the shortage on Thursday.

Due to the lack of production, GM had to stop all North American assembly plant production earlier in the month.

Stellantis NV, parent company of Chrysler, said that it would reduce production at three additional plants in America and Canada due to the shortage.

Barra stated Friday that the problem is “solvable”, but will be there a bit longer.

As part of a discussion with other CEOs, the GM CEO was interviewed by Delta Air Lines’ (NYSE:) chief Ed Bastian. Bastian stated that some newer GM cars have 30% more chips than others.

Barra explained that “customer needs are changing, so we need more semiconductors,” and said that GM was seeking short-, mid-, and long term solutions to the shortage.

Paul Jacobson, GM Chief Financial officer, reinforced the automaker’s 2021 profit outlook. The company also said it expects a stable year for its semiconductor supply in 2022.

Jacobson warned that GM’s wholesale deliveries for the third quarter could fall by 200,000 units due to chip shortages. Also, GM moved production into its second quarter in order to manage semiconductor supplies.

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