'The second COVID shutdown': auto industry insiders explain the microchip shortage
WINDSOR, ONT. -- Thousands of workers in Windsor-Essex, and across the entire automotive industry are facing layoffs, because of another shortage of microchips.
“I call this the second COVID shutdown,” says Flavio Volpe, president of the Automotive Parts Manufacturers Association.
“It’s a temporary, but very, very harmful shortage for the auto industry,” to lose essentially the “brain” of the modern-day vehicle.
Microchips, or semi-conductors as they’re also known, are responsible for anything electronic in a vehicle; from the braking system to the entertainment package to the navigation on board.
In a nutshell, he says when the pandemic first hit in 2020, automakers reduced how many microchips they bought, fearing demand would plummet.
“But when we all went back to work to make cars, the market, came back very, very strong and demand was there, and out-striping the supply.”
Coupled with unprecedented demand by consumers for electronics like gaming systems and laptops to work and stay at home, microchips are in high demand.
Auto-workers are now feeling the squeeze, and in Windsor, some for a second shutdown.
“The companies are making decisions in the Detroit 3 on what vehicles they’re going to put the chips in because they have to be profitable,” says John D’Agnolo, president of Unifor Local 200.
“We’ve been fortunate, in Windsor, because we build the truck engines, those are the most profitable vehicles they (Ford) have.”
So Ford workers at Essex Engine and The Annex will only be idled on Friday April 16.
Workers at Windsor Assembly however, won’t be working for the next four weeks, in addition to the 1,400 people who work at the factory’s feeder plants.
“We’re in a whole lot of hurt as is when it comes to COVID and then this happens,” says D’Agnolo.
He says Unifor is already lobbying automakers and governments to double-down on domestic production for their industry.
“It comes with COVID, and the vaccines, now we’re seeing it with the chips so you see the impacts when you don’t have any control over the products that’s going into the vehicles and this is what’s happening right now and billions and billions of dollars are being lost.”
Volpe says he would love for microchips to be built here, if only they could do this level of specialized production.
“The time it will take to bring it online, will also be about the same amount of time it will to shore up global supply,” says Volpe.
He believes the USMCA deal will help the Canadian auto industry.
Volpe says President Joe Biden has committed to looking into the microchip production, with the goal of not being reliant on overseas companies.
“As long as it in region, then we’re okay, so we don’t have to chase that, as well, here, north of the border, we have a 150 year history, 160 year history of trading well together, regardless of the rhetoric of the last administration,” adds Volpe.