US Automakers turn to Government for Assistance in growing Chip Crisis

A new issue faced by the American automakers has come to light about the automakers encountering a debilitating shortage of computer chips. They have reportedly asked the U.S. government to help solve this issue which has led to the closure of auto factories worldwide and could restrict production until the fall.

The American Automotive Policy Council (AAPC) is a lobbying organization for Ford Motor Co., General Motors Co., and the U.S. operations of Fiat Chrysler Automobiles NV. The AAPC is agitating with the U.S. Commerce Department and President-elect Joe Biden’s incoming administration to press Asian semiconductor makers to reallocate output towards the automobile industry and away from consumer electronics.

“We have requested that the U.S. government help us find a solution to the problem because it will diminish our production and have a negative impact on the U.S. economy until it’s resolved,” Matt Blunt, president of the AAPC, said in an interview Friday, according to Bloomberg. “We are not primarily concerned with where blame may lie for this global shortage if it lies anywhere, but we just want a solution. And the solution is more automobile-sector semiconductors.”

The shortage has already taken its toll as Ford was forced to shut a sport-utility vehicle factory in Kentucky this week as well as announced about closing a small-car plant in Germany for a month. Fiat Chrysler’s plants in Mexico and Canada have had to temporarily stop output. In the coming weeks, more production is expected to be idled.

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Fingers of blame have been pointing in both directions, with chipmakers putting the blame on the auto industry as according to them the automakers brought this shortage on themselves by reducing orders too sharply when the pandemic hit last year. Automakers and their suppliers put their point forward by saying that the chipmakers prioritize consumer electronics because margins are fatter on those devices and as more people stayed home during virus-related shutdowns, demand for them boomed.

According to Blunt, it will hurt the U.S. economy more, the more the dispute drags on, as it takes chip manufacturers at least three months to ramp up production, the downside of this for auto factories will linger deep into 2021.

“Even if you solve this today, you’d have an entire quarter that’s going to be impacted,” Blunt said. “So it’s really going to have an impact through the first half of this year. And the longer it takes to resolve, the more it will bleed into the third quarter.”

Blunt, 50, the former Republican governor of Missouri, said that he has expectations from the Biden administration as he has begun “nascent” discussions with them.

“There are lots of people in the incoming administration that have some automobile experience and expertise, and certainly lots of folks understand, including the president-elect, how important the industry is to the United States,” Blunt said. “So we’re hopeful it will be a priority for them to help us resolve as soon as the president is inaugurated”, he concluded. 

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