By on April 6, 2021

us-capitol, public domain

The Alliance for Auto Innovation (AAI) is hard at work begging the federal government for help while the world continues coping with the semiconductor chip shortage, though it’s hardly the first time the industry has asked for or received administrative assistance. With pandemic lockdowns throwing global supply chains into a tailspin, U.S President Joe Biden said his administration would be seeking $37 billion and new legislation to address the chip shortage while federal agencies were directed to see what could be done in the interim.

But there’s little to be done with the brunt of the relevant manufacturing taking place in Asia, hence the AAI lobby requesting U.S. Commerce Department set aside some cash for domestic chip production in a new bill. 

According to Alliance for Auto Innovation CEO John Bozzella the funding should “be used to build new capacity that will support the auto industry and mitigate the risks to the automotive supply chain evidenced by the current chip shortage.”

The suggested rules would give the automotive sector priority, though it should be said that the industry has likely suffered the worst from the chip deficit. That doesn’t necessarily make it the most deserving but we’ve been chronicling carmakers idling factories for months. Many are desperate for semiconductors so they can continue supplying some of their most lucrative vehicles.

Reporting from Reuters claimed the AAI said the U.S. government could specify “a particular percentage – that is reasonably based on the projected needs of the auto industry – be allocated for facilities that will support the production of auto grade chips in some manner.”

From Reuters:

Automakers have been hit particularly hard by the global chip shortage after many cancelled orders when auto plants were idled during the coronavirus pandemic.

When they were ready to recommence production, they found that chipmakers were busy fulfilling orders for the consumer electronics industry which as seen demand for premium devices – both for work and leisure – boom as people spent more time at home.

Most automakers have been hit by the shortage. In recent announcements, Ford said last week it would cut output at seven North American assembly plants, while Kia Motors said it was cutting two days of production in Georgia.

Our take? The government hasn’t had the best track record when it comes to making sound financial decisions and corporate lobbying groups rarely contribute anything of value to society. But there needs to be a push to bring back manufacturing to the United States after the pandemic has proven the nation to be woefully dependent on global supply chains.

Automakers are going to insane lengths to maintain volume, even as demand has started to dwindle, due to the semiconductor shortage and it’s not even the only component that’s holding up production. Things are still backed up just about everywhere. But, if putting this plan into action results pivots the sad trajectory we’re currently on (without creating additional problems), then it’s going to be difficult to bash. We just hope it’s as effective and fast-acting as a prescription laxative.

[Image: AOC.gov]

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36 Comments on “Auto Industry Requests U.S. Government Help With Chip Shortage...”


  • avatar
    SCE to AUX

    Just print some stimulus chips for the automakers, paid for by the next three generations of American taxpayers.

    What a joke. They’d have us believe a domestic chip plant can be conjured with a Congressional bill and a couple months’ time.

    • 0 avatar
      28-Cars-Later

      Ironically it may be this shortage which brings some manufacturing back to the US (though probably Mexico).

      The now former administration should have cooked up an artificial shortage when it had the chance.

      “Why can’t that work come home? Obama asked.

      Jobs’ reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.”

      https://www.heraldtribune.com/article/LK/20120123/News/605191697/SH

      • 0 avatar
        FreedMike

        What the article points out is that the production lines for the finished product aren’t the only things that need to come back – it’s the production lines for all the COMPONENTS for the finished product as well. The story about the glass for the Iphone is instructive.

        It’s a very complicated issue, which means politicians will reduce it to silly “bring jobs back” soundbites, and they know it’s that simple.

        • 0 avatar
          Lou_BC

          People complain about offshored jobs and manufacturing which is a valid complaint but they don’t realize that inflation was kept in check by offshoring.
          People whine about chineseium products but still have turned Walmart into a multi-billion dollar behemoth.

          • 0 avatar

            “inflation was kept in check by offshoring”

            Yet right by creating new $8 per hour jobs.

          • 0 avatar
            Lou_BC

            “Yet right by creating new $8 per hour jobs”

            That’s part of the equation too. No one cares as long as they have their job and can buy cheap sh!t. But pay more so it’s “home” built by well paid labour and stuff costs more, they’ll complain non-stop.

        • 0 avatar
          28-Cars-Later

          @Freed

          Agreed but in this instance if some of these chips could be produced without the surrounding ecosystem it would be a win (if being the key word).

      • 0 avatar
        slavuta

        “Ironically it may be this shortage which brings some manufacturing back to the US”

        This is very possible. there was big talk about pharma components manufacturing move to US. Is there any movement?

        But there could be more trouble coming for chips. US generals warning administration (rolling my eyes because they always are warning) that China will take over Taiwan within 10 years. Lets see what our politicians will do in 10 years for chip production. Now, this is funny part. In context of today’s rhetoric on China, looks like our leaders don’t expect to achieve any positive developments in this direction in the next 10 years

    • 0 avatar
      aja8888

      Congress can’t even decide on lunch time, let alone have any influence in getting manufacturing to come back to the USA where wages are 10 times the ones in those chip plants in Asia.

    • 0 avatar

      If they can conjure presidential election win they can conjure semiconductor plant as well.

    • 0 avatar
      stuki

      They’re the same gang who believe making Cadillac great again, or even making it Cadillac again, has something to do with handbags and third raters flush with Fed welfare.

      When everyone who owns, hence controls, anything whatsoever; obtained it 100%, without exception, solely from government and central bank robbing of their in-all-ways-but-conectedness superiors; this is about all you can expect, as far as (in)competence at resource allocation goes.

      Soviet five year planers, who obtained their positions and power by similar means, weren’t all that wrt allocation of scarce resources, either. Better, no doubt, than “our” flat out illiterate “inveeeestors who made moooooney from their hoooome and fuuuuunds” (after all, reading Das Kapital requires at least some modicum of literacy, even if one is dense enough to then proceed to take it as as gospel), which is how the Soviet’s Chinese heirs are doing plenty better at anything than “us.”

      • 0 avatar
        slavuta

        stuki!!
        brilliant! Chinese took soviet system and greatly improved it – we see the results. Same with schools. China now has very math/physics capable children while Russia/Ukraine that changed to western style of education worsened in this sense.

        But I think here – “Soviet five year planers, who obtained their positions and power by similar means, ” , you may be not entirely correct.
        Soviet leaders were poor people. Corruption that brought money existed in the lower echelons of power. Like, for example, Moscow “Mayor” (First secretary of city communist party) Grishin – this guy was epitome of corruption. All soviet leaders died penny-less. As soon as they died, their government dachas were taken away from their families.
        In China they deal with corruption pretty quick. 10,000 corrupt managers shot every year.

        – Daddy, who is Carl Marx
        – German Economist, honey
        – Like aunt Amy?
        – No honey, aunt Amy is a senior economist

  • avatar
    SharkDiver

    Hummmmm, wasn’t Trump doing just that…Encouraging manufacturers in critical industries to return to domestic production. But now the political puppets of the multinationals (both republican and democrat) are back in charge and pulling Sleepy Joe’s strings. All you Trump haters are now getting exactly what you deserve and I think it’s hilarious. But have no fear, Sleepy Joe will fix this in no time, just like he has fixed all the problems on our southern border that coincidentally started right after his inauguration.

  • avatar
    ToolGuy

    TTAC Pop Quiz:

    When John Bozzella says “auto grade chips,” he means:

    a) cutting-edge chips with the latest technology

    b) one-or-two-or-more-generation-old chips that fit in with the ‘we are lumbering behemoths and we like to pace ourselves technologically’ mindset of the legacy OEM’s who fund the Alliance for Automotive Innovation

    https://www.autosinnovate.org/about/our-members

    • 0 avatar
      slavuta

      i danno, but may be, auto-grade chips are the ones that can work in extreme cold and hot conditions?

    • 0 avatar
      Art Vandelay

      Probably neither. They seem way more than 2 generations older other than maybe in infotainment stuff. ECUs take little processing power to do their thing and engineers are very much of the “if it ain’t broke” school in those areas…and rightfully so. You don’t need a Ryzen 9 to do what a Zilog Z80 can accomplish.

    • 0 avatar
      Art Vandelay

      But your premise is correct…we make plenty of components ts domestically that are on the level of automotive grade chips. Automakers can get them cheaper elsewhere so they do. Until they can’t.

  • avatar
    Lou_BC

    Another aspect not discussed is the nearly universal adoption of LEAN manufacturing processes. “Just in time” supply lines have been disrupted directly or indirectly by COVID-19, natural disasters, and oddities like the EverGiven plugging the Suez canal. Governments need to look at offshored manufacturing but also the lack of critical inventory. The world is becoming an increasingly hostile place. Relationships need to be bolstered but so do reserve capacity and storage.

  • avatar
    FalconRTV

    So they are going to spend $37.000,000,000 of taxpayer money to solve this problem? Incredible.

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