What can America expect as supply chain issues leave the auto industry stuck in park?

What can America expect as supply chain issues leave the auto industry stuck in park?

October 27, 20212 min read

America’s auto industry is slowing down – and this time the main source is not a matter of labor issues or a lack of customers. This time this crisis, like those plaguing so many other industries lies in the tangled web of supply chain issues that is challenging manufacturing, industries and economies across America and the continent.

In the United States, the auto industry has been hit particularly hard.

The nation’s largest automaker and the rest of the global auto industry have been sporadically shutting down plants since late last year due to the semiconductor shortage, which has cut supplies on dealer lots and driven new vehicle prices to record levels.

To be sure, production still isn’t back to normal because some of the factories will only run on one shift per day.

Phil Amsrud, senior principal analyst for IHS Markit who studies the chip market, said GM’s move is a good sign, but doesn’t signal the end of the chip shortage. “It’s just not a sign that the patient is through all the rough spots and it’s a matter of weeks before they’re released from the hospital,” he said. October 22 - Associated Press

There has been a lot of coverage, and a lot of questions asked as to how this happened and what it will take to untangle the mess.

And that’s where experts from Augusta can help with coverage.

"There are several factors but the main themes are suppliers inability to react to the increased demand, and governmental policies and responses,” explains Dr. Mark Thompson an economist and expert regarding the industrial issues facing America. “When COVID initially hit, demand dropped considerably. As it relates to the shortage of computer chips, what do you think consumers were demanding during the early phase of COVID...computers, laptops, handheld devices, etc. Technology companies responded and chip manufacturers switch to produce these items. Now, as consumers demand for new cars pick up, there is a shortage of the chips necessary for new cars. As it relates to government intervention, the stimulus has also increased demand for various goods and services furthering the shortage."

As for how long will it take for America to see the supply chain replenished?

"Good guess,” says Thompson. "I would say that we should expect to continue to see these shortages through the rest of 2021 and part of the way in 2022."

If you’re a journalist covering the ongoing supply-chain issues – then let our experts help with your stories.

Dr. Mark Thompson is an economist with highly accomplished work in business conditions, risk analysis, energy and the healthcare industry. Dr. Thompson is available to speak with media regarding the economic and industrial issues facing America during this supply chain crisis - simply click on his icon now to arrange an interview today.

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  • Mark Thompson, PhD
    Mark Thompson, PhD Dean of Hull College of Business, Professor of Economics

    Mark Thompson, PhD, dean of the Hull College of Business, is an economist in business conditions, risk analysis, energy and health care.

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