Auto makers around the world are closing plants due to a shortage of vital computer chips, dubbed “chipageddon” for its devastating impact on the global manufacturing capability, the Wall Street Journal reports.
Ford Motor Company will idle it’s Louisville, Kentucky plant because of the shortage, laying off 3,900 workers who make Ford Escape and Lincoln Corsair vehicles. Globally, Honda, Fiat-Chrysler and Volkswagen are all facing similar decisions to suspect operations.
Computer chips and semiconductors are an increasing vital part in all vehicles, from consumer cars to tractor trailers to construction equipment. A consumer car uses between 40 and 150 chips for everything from engine operation to climate control to transmissions.
The chip shortages hits at a particularly bad time in the auto industry, which is trying to recover from a 2020 year when auto sales and manufacturing suffered due to the global coronavirus pandemic.
In an effort to keep production going, General Motors sent a letter to its chip suppliers requesting them to prioritize delivery of a year’s supply of chips to ensure production throughout the year.
A reduced inventory of new cars is likely to have a ripple effect on the automotive industry, going down to local dealership and the lucrative used car market.