A nationwide semiconductor shortage is causing major problems for local automotive and industrial equipment suppliers. Deemed the semiconductor chip crisis by national media outlets, the shortage affects everything from vehicles to game consoles to national security.
According to Market Watch, the $500 billion industry has been affected so negatively — in large part due to the COVID-19 pandemic — that President Joe Biden met with CEOs of major tech companies two weeks ago to address the issue. During that meeting, Biden ordered a 100-day review of the semiconductor supply chain.
The Hill, the largest independent political news site in the U.S., reported that the crisis is fueled by dependence.
“The shortage is fueled by expanded use of electronics, pandemic interruptions and production problems at multi-billion dollar chip factories around the world, disrupting purchase orders and creating hoarding in advance of predicted shortages,” the outlet reported.
Locally, Hymark Managing Partner Tonya Mauzy said her company has experienced delays on production. Hymark imports products from Germany and Italy to distribute throughout North America. Those products range from medical supplies to food to piping and tubing.
The components used in sensors and encoders come from overseas and, while Hymark receives those deliveries regularly, Mauzy said they’ve been experiencing 1-2 week delays on a regular basis as well.
“We’ve had trouble getting parts to make [the products we manufacture],” she said. “Prices for lumber and steel have skyrocketed as well.”
The shortage has had a major negative impact on Champion Ford. General Manager and President Duke Brubaker said his car lot currently holds only eight Ford F-150s. That’s compared to 40-50 on a normal day.
“There are 20,000 to 25,000 units sitting around the country just waiting for chips,” Brubaker said.
Brubaker said all cars require multiple semiconductor chips used for a variety of purposes, including navigation and dashboard controls. He predicted the automotive industry wouldn’t recover from the shortage until sometime between August and October.
That means most dealerships won’t have a normal inventory of new vehicles until after the peak buying season is over. Brubaker said May, June and July are typically his dealership’s strongest months of the year.
“It’s going to affect the auto industry by about $60 billion,” he said. “It’s a worldwide issue.”
Brubaker said each manufacturer has a different plan for restocking dealerships with new vehicles. Mazda bases its deliveries on what’s selling and where. Champion Ford’s Mazda sales increased by 300% this year, so they’ve been able to receive enough new vehicles from that company.
However, Ford’s distribution plan operates on a “different bandwidth,” Brubaker said. On Monday, Champion Ford received three new trucks, and one sold immediately.
Because semiconductor chips for vehicles are made entirely overseas in Asia, it puts the American automotive industry in a vulnerable position, he added.
If there’s ever been a time to buy a new vehicle, Brubaker said it’s now. Prices are still good, and new cars and trucks won’t even be available by June or July.
“When we dealt with COVID, we thought that was hard (in terms of the inventory situation),” he said. “But this is worse.”
