Rev up U.S. automotive supply chains

Technology has become increasingly intertwined with the auto industry, as the recent semiconductor shortage has brought to light. The Detroit Three have had to halt production on numerous models for lack of chips. So a bipartisan coalition in Congress is trying to boost U.S. supply chains.

The lawmakers are right to do so, given competition from China as well as federal pressures on the automakers to move to electric vehicles.

The semiconductor chips are integral to the manufacturing of modern vehicles, from power steering to engine-management systems. COVID-19 has disrupted global supply chains.

One analysis from AlixPartners estimates that global auto production is already down 1.4 million vehicles due to the chip shortage. The auto industry stands to lose $61 billion this year as a result.

President Joe Biden acknowledged some of the challenges facing the automakers, and the importance of ensuring they have the supply chains they need to continue production, although his administration has said he’s not likely to offer automakers any special treatment.

The group of 23 senators and 42 House members — Republicans and Democrats — sent Biden a letter Monday, iterating their support for the CHIPS for America Act that would put in place manufacturing and research incentives for the semiconductor industry. Congress has already authorized the spending, but it’s not yet been appropriated.

Members of the Michigan delegation are on board. Democrats Sen. Gary Peters, Reps. Debbie Dingell and Haley Stevens, along with Republican Rep. Peter Meijer, all signed the letter.

“The United States cannot wait to provide these resources over the years ahead,” the lawmakers wrote. “The halted production lines for consumer technology, auto manufacturers, truckers, and other critical industries due to a semiconductor shortage further highlights the pressing need to act quickly and fund the enacted bipartisan provisions.”

Biden has proposed $50 billion to fund initiatives under the CHIPS for America Act in his $2 trillion jobs and infrastructure package.

Automakers would like a certain amount set aside, especially for the “legacy” chips used in auto manufacturing, which are different than ones used in other electronics.

Tech companies are pushing back against any special treatment for autos from the federal government, however, warning that kind of interference could distort the market.

A letter from the tech leaders to Congress and the White House states: “The U.S. should welcome and encourage the investment in and production of semiconductor technology by all eligible companies to achieve this goal.”

Those are valid points, but it’s the auto industry that appears to be suffering the most from semiconductor shortages.

Biden and Congress should work together to secure this bipartisan funding to help prevent future disruptions to the automotive supply chains that are vital to the Michigan and U.S. economy.

— Detroit News


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