Coronavirus Outbreak Could Affect Production at 2 GM Plants, Union Officials Say -- Update

By Ben Foldy and Mike Colias

Union officials at two major General Motors Co. factories in the U.S. are warning of parts shortages related to the coronavirus outbreak in China, a sign that fallout for the auto industry's global supply chain could soon touch U.S. shores..

A GM factory in Flint, Mich., which makes heavy-duty versions of GM's Chevrolet Silverado and GMC Sierra pickup trucks, faces shortages of at least two parts sourced from China, said Chad Fabbro, a financial secretary at the United Auto Workers' local representing workers at the plant.

In Arlington, Texas, GM's assembly plant is confronting the possibility of running out of certain parts from China, said Terry Valenzuela, president of UAW's local chapter. The situation remains fluid, he added.

That factory makes large sport-utility vehicles that are mechanically similar to pickup trucks, including the Cadillac Escalade and Chevrolet Suburban.

GM said it doesn't anticipate an impact on truck production as of now.

"We continue to monitor our supply chain and are in close communications with our Tier One suppliers to mitigate any risk to production in North America," the company said in a statement.

The outbreak of the novel disease, which health authorities have named Covid-19, led China's government to impose extended shutdowns of manufacturing plants throughout the country after the traditional Lunar New Year holiday, in hopes of slowing its spread.

Although many companies said they planned to restart plants this week, analysts have stressed the impact of supply-chain disruptions, and worker quarantines make it difficult to anticipate when production will return to normal.

The outbreak has halted assembly lines at several car plants in China. Forecasters at LMC Automotive expect the outbreak to depress Chinese auto production by around 1.2 million cars this quarter. Last year, GM produced nearly 640,000 cars -- nearly 40% of its Chinese production -- in Hubei province, where the outbreak originated and where most of the infections have been diagnosed, the firm said.

The shutdowns have also affected factories making auto parts and components. Shortages of China-made parts have already started rippling through the global automotive supply chain, leading Hyundai Motor Co. and France's Renault SA to temporarily idle some assembly lines in South Korea.

The Flint factory is one of GM's largest in the U.S., employing about 5,000 workers. It would likely run out of decals and vents first, both of which can be installed after a near-finished truck rolls off the assembly line, Mr. Fabbro said.

Longer delays could impact more critical components, he said. "This is going to be a day-by-day monitoring thing," he said. "If it goes six weeks, then we all have bigger problems."

GM has arranged for parts to be flown by chartered jet from China when they are available, Mr. Fabbro said. A GM spokesman declined to comment.

GM derives the majority of its global profit from sales of large pickup-trucks and SUVs built in North America. The pickups are built at the Flint factory, along with a plant in Fort Wayne, Ind., and another in Silao, Mexico. The Arlington plant makes all of GM's large SUVs.

GM has been scrambling already to replenish truck stocks after a 40-day strike last fall that shut down production across its U.S. factories.

Car companies have fortified their global supply chains in the years since a tsunami in Japan in 2011 knocked out supplies of certain components and led to cuts in vehicle production across the globe.

Write to Ben Foldy at Ben.Foldy@wsj.com and Mike Colias at Mike.Colias@wsj.com

(END) Dow Jones Newswires

February 14, 2020 13:10 ET (18:10 GMT)

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