Mon, 24 Jan 2022

DETROIT, Michigan: Commerce Secretary Gina Raimondo visited Detroit to highlight the urgent need to manufacture semiconductor chips in the United States, as a shortage is continuing to stifle Michigan's automotive industry.

During her visit, she met with U.S. Rep. Debbie Dingell, U.S. Senators Debbie Stabenow and Gary Peters, other members of Michigan's congressional delegation and officials from the United Auto Workers, in an effort to gain congressional support for the "Chips Act."

Upon approval, the act is to provide subsidies of $52 billion for domestic semiconductor manufacturing and research. While the bill has been approved by the House of Representatives, it has not yet been called up to the floor of the House.

"The truth is, every single day we wait for the full passage and implementation of this bill, is a day we cannot afford to fall further behind," Raimondo said, as reported by mlive.com.

The transition to electric vehicles (EV) is also adding pressure to purchase more semiconductor chips, and chip production will need to accelerate to meet the Biden administration's goal of ensuring that half of all new vehicles reach the target of zero emissions by 2030.

According to AutoForecast Solutions, 391 auto manufacturing plants around the world have been affected by the semiconductor shortage, with more than 220 closing for 21 days or more.

AutoForecast Solutions CEO and President Joe McCabe said North America leads "a sticky race," noting it has 2.3 million "unrecoverable vehicles," which are those built during plant shutdowns and will not be made up before the year's end or possibly ever, compared to China with one million.

Production ceased in 2020 due to COVID-19 outbreaks in manufacturing plants around the world, but this year, workers are back but materials are not, he added.

"It does not matter if you have a a healthy labor pool. If you do not have the parts..you cannot build the cars. Simple as that," he added, as quoted by mlive.com.

According to McCabe, by mid-2022 production will stabilize and plant shutdowns will become less frequent, but the long-term solution is having sustainable chip production in the U.S.

"We need more domestic investment in our supply chain again. It is our fault that we have offshored that, and now it is showing the cracks in that strategy," he added, noting that the U.S. is a leader in global chip design, but Asia manufactures 75 percent of all chips.

Manufacturers are also now working directly with suppliers, with Ford Motors announcing a collaboration with New York-based GlobalFoundries, while GM announced it has begun working with seven domestic and international suppliers of chips.

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