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Auto Industry Continues To Struggle With Supply Chain Issues

AILSA CHANG, HOST:

More than a dozen auto plants across North America are on pause as companies like General Motors and Ford deal with ongoing shortages of computer chips and other supplies. NPR's Camila Domonoske has been following the story and joins us now. Hey, Camila.

CAMILA DOMONOSKE, BYLINE: Hi, Ailsa.

CHANG: So what exactly is the problem facing these plants?

DOMONOSKE: Well, the single biggest problem is a shortage of computer chips. The companies that make semiconductors just couldn't keep pace with how quickly demand for cars came back from pandemic lows. And there are a lot of computer chips in modern cars.

CHANG: Yeah.

DOMONOSKE: They're tucked in everything from engines to the seats. That's how they can tell if you're sitting in them. So you now have plants shutting down for days to weeks. General Motors just announced two more plants that are going on pause. Ford has four down right now. And even plants that are still open - you know, most major automakers have had to cut production somewhere.

CHANG: Wow. Wait; so is every automaker affected by this problem?

DOMONOSKE: Well, right now Toyota and Honda are operating like normal in North America. The shortage is global, but it doesn't affect everyone equally at the same moment in time. You can kind of think back to last year when toilet paper suddenly disappeared from stores, right?

CHANG: Right.

DOMONOSKE: Everyone was facing a toilet paper shortage. But if you were down to your last roll at home, it was a really urgent situation. And if you had, like, a Costco pack that was mostly full, you were going to be fine for a little while. So automakers - some of them are in different situations with their current stash of semiconductors than others. But two things - one, it might get worse for them as this stretches on, probably for months. But also, semiconductors are the biggest issue. But there are shortages of a lot of goods right now. Ann Wilson is with the Motor Equipment Manufacturers Association. That's a trade group for auto suppliers. Here's what she says.

ANN WILSON: We are seeing the greatest challenges to our supply chain that we have seen in decades, probably 20 or 30 years.

DOMONOSKE: And by that, she means backlogs at ports, winter storms knocking out phone plants in Texas. There's a steel shortage, so that means even automakers who have enough computer chips on hand can still be hit in a crunch. Like, Honda is open now, but they had to close most North American factories just two weeks ago for all of these reasons.

CHANG: Wow. Well, ultimately, Camila, what does all of this mean for the industry as a whole and for car buyers?

DOMONOSKE: We're talking about a million cars delayed just from the computer chip problem, not even the other shortages. So for carmakers, this is tens of billions of dollars in losses. For auto workers, they have temporary layoffs or cuts in their hours to deal with, reducing their take-home pay. There are ripple effects to other suppliers. When a plant goes dark, it affects every company that makes a part that feeds into that plant, right? And then on the shoppers, you know, if you're looking for a new car right now, they're going to be in shorter supply. And that will push prices up, and it means fewer options are available if you're looking for a particular configuration.

CHANG: Right. Right. So how is the Biden administration responding to this so far?

DOMONOSKE: Well, on Monday, there's going to be a meeting between the White House and a bunch of companies - Ford, General Motors, Stellantis, which was formerly known as Fiat Chrysler, as well as the semiconductor companies and tech companies to talk about what to do. It's clearly a top national concern for the administration. But things like investing in domestic supply chains - it's a long-term fix, not a quick solution.

CHANG: That is NPR's Camila Domonoske. Thank you, Camila.

DOMONOSKE: Thanks, Ailsa. Transcript provided by NPR, Copyright NPR.