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News Article

GM to Pause Production at Silao Assembly Plant for One Week

By Rodrigo Andrade | Mon, 08/29/2022 - 13:07

Automaker General Motors (GM) will pause operations at its pick-up truck production plant in Silao, Guanajuato, starting on Aug. 29. Production will restart on Monday, Sep. 5. The production pause was caused by supply chain issues, especially the lack of microprocessor availability, which continues to disrupt the industry despite major efforts from key players in the automotive world. 

The company announced that it would keep working to solve this problem. “General Motors is actively working with its supplier base to resolve issues as they arise to meet customer demand,” said the company in a statement, as reported by Reuters. The assembly plant in Silao, which currently exports about 80 percent of its units to the US, produces the Cheyenne, Silverado and GMC Sierra, among others. 

The company highlighted the “relatively stable” production in its assembly plants located in North America since 4Q21. GM’s other full-sized plants will continue normal operations. 

GM’s plant in Silao has been in the spotlight numerous times in recent years. In 2021, the US government presented a labor complaint to the USMCA’s Rapid Response Labor Mechanism demanding to review whether workers at the plant were being denied their freedom of association and collective bargaining rights. Following the resolution of the complaint, workers rejected a labor contract with CMT in favor of an independent union, as reported by MBN. 

In June 2022, workers at the plant in Silao received an 8.5 percent wage hike thanks to the negotiations of its independent union. This has been the highest salary increase in the automotive industry. The contract had an approval rate of 87 percent from the almost 7,000 workers in the plant, who voted in Aug. 2021.  

Semiconductor scarcity is expected to continue affecting the automotive industry, despite the many strategies its players have taken to tackle the problem. Other automotive companies had also been forced to pause production due to their scarcity. Production is only expected to stabilize by 2024, said Guido Vildozo, Senior Manager Americas of Light Vehicles Sales for Forecasting, S&P Global Mobility, as reported by MBN. 

The recovery in production is being delayed in part because vehicles require an increasingly larger number of semiconductors. In 2017, the average vehicle required about 700 semiconductors, while this year they require about 1,600, explained Vildonzo. This explains why even after semiconductor production increased by 15 percent in 2022, it was not large enough to meet the new demand. “[Production] is growing 15-18 percent but the additional 7 percent of semiconductors per unit increase, coupled with the fact that the hybrid and plug-in hybrid cycle will also increase, puts pressure on semiconductors. That is why [automotive manufacture] will not be normalized until 2024,” said Vildozo. 

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Rodrigo Andrade Rodrigo Andrade Journalist & Industry Analyst