We’ve written before about the growing role of software and connectivity in the automotive space and the massive expansion in internal computing in vehicles. Computerized applications are used widely for both driving and safety features and for the V2X (vehicle-to-everything) user/consumer experience.
As we approach the final quarter of 2021, the global semiconductor shortage continues to disrupt the auto industry. Unfortunately, there doesn’t seem to be much change in sight. The ongoing shortage of chips that are suitable for automotive applications, which we wrote about previously, means that car makers simply don’t have enough chips to put into all their models.
Here are some current examples of automaker slowdowns:
- GM expects production to be down by 100,000 vehicles in the second half of 2021 and will add or extend shutdowns at eight plants in the US, Mexico, and Canada.
- Ford reports that new vehicle sales are down 33.1 percent from this time last year
- Toyota is cutting production in the U.S. and Japan by 40 percent for the next two months
- Nissan’s facility in Smyrna, TN will remain closed through mid-September
Closures and slowdowns like these and others further impact auto suppliers, whose parts and subassemblies are in less demand since the cars aren’t being made at previous volumes.
A Chain Reaction Across the Supply Chain
It’s hard to isolate a single factor causing this mess. What began as rolling shutdowns in auto plants due to worker shortages from COVID snowballed into lower vehicle production overall and a reduction in orders for new automotive semiconductors. That triggered chipmakers to focus on chips for other industries that were not suffering the same shortages, such as consumer electronics. What’s more, because car makers tend to rely on “just in time” production methods, they didn’t have much chip back-stock to turn to. So, they’re now waiting for chip makers to be ready to shift production. But as if that’s not enough, the chip plants themselves are facing delays because their plants are adversely affected by harsh weather, worker illness, and their own material shortages.
COVID’s Impact Continues
Like it or not, the Delta variant of COVID-19 and varied access to vaccines worldwide mean the pandemic is not over and is still very much in control. Worker shortages due to widespread illness are adding another layer to the challenge. As The Guardian reports, “German chipmaker Infineon, the top automotive supplier, was forced to suspend production at one of its plants in Malaysia in June, due to a coronavirus outbreak.”
Worker shortages in shipping and logistics, raw materials manufacturing, and other industries also contribute to limited supply of materials. In addition to semiconductors, glass, plastics, and metals are in short supply now too. And in many cases, so are the drivers and shipping containers needed to transport them.
The result is often last-minute cancellations of orders, rescheduled deliveries, and harried scrambling to fill in the gaps with other work. It underscores how interconnected and delicate the global supply chain is.
At CEP Technologies, we feel it also shows the importance of communication between suppliers and manufacturers because we’re all in it together. We strive to be not just your supplier, but your partner – please contact us to learn more.
It’s impossible to ignore the global semiconductor shortage has been in the news lately. And it probably won’t be going away any time soon. The impact on automakers, and ripple effect on their suppliers, is significant. A recent case in point is this June 30 article on production slowdowns at Ford plants:
“Automotive electronics, which may include everything from displays to in-car systems, are set to account for an estimated 45% of a car’s manufacturing cost by 2030, according to a Deloitte report,” reports this article from Bloomberg. Clearly a component in demand, semiconductors have expanded the driving experience immensely for consumers.
These days when it seems everything has gone digital it’s easy to forget about all the mechanical components that are critical to electronics and batteries, especially in cars and trucks. Industry leaders, governments, and citizens all want to reduce carbon emissions and rely less on fossil fuels. At the same time, semi-autonomous and “smart” vehicles are gaining popularity for safety reasons and driver convenience.
In this age of tightening budgets, purchasers are tasked with sourcing parts economically, and designers and engineers know parts must be cost-effective to manufacture. It’s tempting to think of a stamper merely as a vendor or supplier of materials. After all, if the part meets specification and budget requirements, surely that’s good enough. You might even save money on production.
As OEMs and aftermarket equipment companies tighten tolerances, manufacturers face the challenge of producing stamped parts that meet and exceed their customers’ requirements. Poor die design along with scrapped or reworked parts cost everyone involved time and money. It’s critical to get it right the first time and every time.