Date: 15.07.2021

Automotive supply chain issues not just about semiconductors

An unexpected upturn in consumer demand is playing havoc with Europe’s automotive supply chains, as supply shortages disrupt OEM’s manufacturing productivity

Factory shutdowns were a significant contributor to poor sales in 2020 and there were fears that a shortage of semiconductors would be manufacturers undoing in 2021.

The semiconductor chips are important to the microcontroller units that underpin everything from the transmission to the airbags in modern vehicles and without sufficient supply, automakers would be forced to extend plant shutdowns – as many were.

In the UK, a shortage in semiconductors is causing major disruption, hitting car manfacturers and OEMs [original equipment manufacturers] with restricted availability of critical components and parts, meaning factories are either about to, or are already, shut down in Europe and the UK. There are many components in a vehicle and missing one of these causes delays – missing many causes serious delays to the delivery of a vehicle to the end of line.

Germany recorded a 16% increase in its first-half year car production, but such has been the scale of recent disruption that its full-year forecast has been slashed. This is Europe’s largest car and vehicle manufacturing country, with many other factories dispersed on a regional global level.

Reports suggest German manufacturers were caught by an unexpected surge in demand, having idled production early in the pandemic and were unable to scale up their supply chains and operations when needed.

Semiconductor shortages are a global issue, with OEMs typically balancing global supply to try and keep certain models being produced. This isn’t unique to the automotive sector, which is part of the issue, as higher value products pound for pound absorb the increased availability of the essential commodity which is required in most electronic devices from a car to a mobile phone.

The UK is not being slower than any other region, as the global supply chain is experiencing rolling difficulties across regions, with manufacturers having to pause production at domestic and European mainland plants due to semiconductor shortages.

It is unlikely that the semiconductor problem will be resolved in 2021 and is likely to extend into 2022.

Despite the difficulties in Europe, automotive OEMs in other regions are recovering productions, particularly in Asia, where they are in proximity to the primary semiconductor suppliers, with specialist automotive Ro/Ro carriers returning to full automotive capacity.

Metro has been working with automotive manufacturers and their primary suppliers for decades, optimising complex inbound and outbound supply chain operations, on all modes of transport.

For further information on automotive and related logistics tailored platforms that Metro deliver please talk with Tom Fernihough or Grant Liddell who will be delighted to arrange a meeting, call or presentation covering all current options available within our global network and platform.