Automobile and electronics manufacturers across Europe had to partly shut down assembly lines or slow down production earlier this month due to a global shortage of semiconductors. On average, a newly produced car contains up to 150 chips and therefore orders could be extensively delayed. This is already the second major disruption of global supply chains since the beginning of the COVID-19 pandemic in early 2020.
As the hunger for chips is constantly rising, with consumer electronics, but also the medical technology or the ICT sector in the narrower sense being among the profiteers of the pandemic, chip manufacturers cannot satisfy the growing demand. The current supply shortages are therefore only a symptom of a structural problem, which will probably be aggravated due to the accelerated digitalisation in the wake of the ongoing pandemic. The European Commission’s envisaged flagship programme of a twin transition to a green and digital economy is at real risk, should the growing demand not be met.
The overdependency on global supply chains has direct impacts on workers in Europe. Ford has already announced the temporary closure of production sites into February, and Volkswagen and Daimler have cancelled shifts, with no remedy currently in sight. The repercussions for the automotive ecosystem have yet to be seen.
IndustriAll Europe Deputy General-Secretary, Judith Kirton-Darling:
“This should be a warning signal to the entire automotive industry in Europe. The over-dependency on global supplies of critical components involves massive risks and is today severely hampering car production in Europe. Manufacturers should prioritise making supply chains more resilient and find alternative solutions to be able to take precautions against future shortages. Success of high-profile European initiatives on semiconductor strategic value chains will be measured in their real-world impact on sectors like our automotive industry.”
IndustriAll Europe Deputy General-Secretary, Isabelle Barthès:
“This current situation again shows the vulnerability of European supply chains, especially in the ICT sectors. We strongly advise them to work on their resilience, to diversify supply routes, and to invest in the extension of stockpiles in order to prepare for future ruptures. Should the European Commission be serious about the EU’s digital and technological sovereignty, or the open strategic autonomy, the time to act is now. Concepts for how to strategically reshore, or substitute parts that are currently being produced offshore, should be placed on the table without further delay.”