US Carmakers Urge Congress To Prioritize Auto Chips

The US auto industry and the country’s principal auto workers’ union have urged Congress to prioritise automobile semiconductors as the country prepares a funding package to ease the global chip supply crisis.

US president Joe Biden has proposed $50 billion (£35bn) to boost US semiconductor production, while tech companies and other industries have urged the government not to favour one sector over others.

But the American Automotive Policy Council, the Motor & Equipment Manufacturers Association and the United Auto Workers union urged Congress to “prioritise production of the semiconductors necessary to assemble vehicles here in the United States”.

“This will ensure that motor vehicle manufacturers have a fair share of chips needed to meet consumer demand,” they said in a joint statement.

Production pause

Carmakers worldwide have been forced to slow or pause production due to their inability to obtain processors for key auto functions, such as engine management or driver assistance.

The shortage, caused by unexpected demand patterns due to the pandemic last year, has laid bare carmakers’ reliance on a complex, international supply chain, much of which is based in Asia.

In response, economies such as the US and the European Union are looking to boost domestic processor production capacity.

In the letter, the US auto industry estimated it lost over 330,000 production units due to the chip shortage.

Meanwhile, job losses in the industry contributed to a disappointing jobs report for April issued on Friday by the US Bureau of Labour Statistics.

Economic rebound

The study found that the US motor vehicle and parts sector lost 27,000 jobs in April.

The same study found that US employers added only 266,000 jobs in April, far lower than the one million anticipated by economists.

The figures bolstered the industry’s argument that the auto chip shortage is hampering a worldwide economic rebound from the pandemic.

Ford last month said the shortage may cut second-quarter production by half and cost about $2.5bn and about 1.1 million units of lost production for 2021.

Automakers warned the crisis could continue into 2022 and urged Congress to take action.

Congress should “include specific funding for semiconductor facilities that commit to dedicating a portion of their capacity to motor vehicle-grade chip production”, their letter said.

‘Fairness’

But the National Electrical Manufacturers Association, Association of Home Appliance Manufacturers and Air-Conditioning, Heating and Refrigeration Institute demanded that Commerce Secretary Gina Raimondo ensure chip supplies are “fairly allocated across industry sectors”.

They said she was “dismayed” Raimondo said she was seeking to prioritise auto companies.

“We simply ask for fairness so that the health, safety, comfort, productivity, and other needs of Americans can be met,” the companies wrote.

Raimondo told MSNBC on Friday she thought the auto chip crisis was a significant factor in April’s disappointing jobs report.