Western Railroad Discussion > Auto plants may see shutdowns

A shortage of computer chips may cause several US car makers to suspend US production for several weeks. The Wall Street Journal says that some vehicles have 150 chips. Lose one and the line stops. Jeep is stopping production of its Compass in Mexico for at least three weeks.

Kansas City Southern, UP, BNSF all haul significant amounts of finished auto traffic from Mexico.

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So where are the computer chips made? And is the pandemic a factor?

A fire in a major Japanese semiconductor fab is a factor.

a train of  full of Farfenugan was robbed the other day in mexico

New cars have tons of sensors and monitors plus the dashboard stuff. For example the Tesla fad is to have numerous cameras and the ability to store and transfer the images. On top of all the mandated stuff.

Kinda ridiculous.

not when they get vandalized

The fab fire, Covid absenteeism in the US, China, Taiwan chip plants is another issue. Ford is also expecting some plant shut downs.

In a global supply chain, every link matters.

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The wonder, the beauty, the miracle of globalization strikes again with its painful fist.

chips are getting made here in colorado,  but I have a feeling when there are huge numbers they go off shore

=15.6pxFord announced last week that the Louisville (Ky) Assembly Plant would be shutting down for at least a week due to parts shortages.

John
 

the great reset has begun

CajonRat Wrote:
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> the great reset has begun

Intel, for one, makes chips in US, Ireland, Israel, etc. And ships them all over the world.

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coach Wrote:
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> The wonder, the beauty, the miracle of
> globalization strikes again with its painful fist.

Globalization is the direct by-product of capitalism's demand for ever-cheaper labor and cost-cutting.  Every American CEO who has ever sent jobs overseas to cut labor costs (and up his company's stock price , and thus his own his stock perks and net worth) is an example of "the miracle of globalization."

aehouse Wrote:
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> coach Wrote:
> --------------------------------------------------
> -----
> > The wonder, the beauty, the miracle of
> > globalization strikes again with its painful
> fist.
>
> Globalization is the direct by-product of
> capitalism's demand for ever-cheaper labor and
> cost-cutting.  Every American CEO who has ever
> sent jobs overseas to cut labor costs (and up his
> company's stock price , and thus his own his stock
> perks and net worth) is an example of "the miracle
> of globalization."

Agreed, although the US was founded to provide cheap raw materials and slave labor to the British and Spanish mercantile systems.  US and Canadian railroads were largely financed by UK investors, again seeking to develop cheap sources of grain and raw materials. Just like the railroads China is financing in Africa, and the ports it has financed in Sri Lanka, Bangladesh, etc.

The failure has been the refusal of US labor to take stock shares and participate in the long term gains their efforts produce.

> The failure has been the refusal of US labor to
> take stock shares and participate in the long term
> gains their efforts produce.

Totally agree.  There's more pieces to this puzzle than US CEO's trying to boost their net-worths!

Curt Wrote:
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> > The failure has been the refusal of US labor to
> > take stock shares and participate in the long
> term
> > gains their efforts produce.
>
> Totally agree.  There's more pieces to this
> puzzle than US CEO's trying to boost their
> net-worths!

A major factor in the loss of union jobs nationwide over the last several decades is the unions' refusals to accommodate pension reductions. I have seen and have been directly personally affected by such union tactics. How many county/city/municipal governments are in dire financial problems in great part due to unbelievable lifetime pensions they have to pay out.

There's also a lesson to be learned here about just in time manufacturing.  The move for years has been to run as lean as possible, with components not arriving more than days before being needed.  The upside is you reduce storage space, taxable inventory, and capital tied up in said inventory, but the downside is you pay a lot more in shipping for reliability, have to carefully manage every supplier, and when a mouse sneezes halfway around the world, a production line down three weeks later.

Speaking for an industry I know well, electronics manufacturers have gotten very spoiled in the last ten years with parts always available and the ability to get them nearly on-demand from manufacturers or distributors with overnight shipping.   It used to be (a decade or so ago) that 18-40 week lead times on weren't unusual on more specialized parts, and you put your orders based on those lead times to carry you over until the next run.  With all the disruptions over the last year, we're very much back there and some companies have failed to adapt to the old reality.  (In all fairness, the reality set in very, very quickly.  Parts I've had no problem sourcing for years are now months backordered.)

 

CajonRat Wrote:
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> the great reset has begun

The Japanese chip plant in question is Asahi Kasei Microsystem (AKM), who make Digital <--> Analog Converter (DAC/ADC) chips for high end audiophile manufacturers (Denon, Onkyo, Marantz). The fire happened in October 20th, and was devastating enough to last 3 days. 2+ month lag for supply chain for cars that are unlikely equipped with such high end sound systems?

The same article (published in November) talks about COVID-related supply chain problems with non-AKM chips. Whether people believe if this is the "reset" or not, I have doubts that car manufacturers are stopping production primarily because of "global supply chain issues."

My observation is that car manufacturers produced cars in anticipation of an economic recovery that was about to happen, and it looks like they were wrong, so they are trying to avoid a market glut. If that was true, the industry wouldn't say it outright - might spook the idiots of Wall St.



Edited 1 time(s). Last edit at 01/11/21 19:09 by cchan006.

dan Wrote:
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> a train of  full of Farfenugan was robbed the
> other day in mexico
 Not to worry soon there will be more cars produced there and more jobs going that way now.

Kansas City Southern has been plagued with periodic shutdowns of its lines in Mexico by protesting workers and peasants. Shipments of finished cars north, and parts south have disrupted production in several auto factories.

Discussed on TO a few weeks ago.