Short-Time Work at VW and Daimler

Time and again the production lines stand still in car factories – the manufacturers refer to the industry-wide shortage of chips. Now it hits Volkswagen and Daimler again.

There will be stoppages in the coming week at the VW main plant. In the Tiguan, Touran and Tarraco production as well as in the Golf production in late and night shifts, the Wolfsburg-based company switched to short-time work. In the Daimler plants in Bremen and Rastatt, short-time work is already the order of the day. The reason is once again the industry-wide shortage of chips.

Interruptions cost billions It is nowhere near the first time that semiconductor shortages have slowed automakers’ production. It was not until the end of May that the VW luxury subsidiary Audi at the Ingolstadt and Neckarsulm locations suffered production interruptions. BMW had been hit a few weeks earlier. The Cologne Ford plant is also affected. The German auto industry is not alone with its problems: The US auto giant Ford calculates charges of around 2.5 billion dollars this year due to the lack of chips. The problems in the auto industry have consequences for this the entire economy. Just today, the researchers at the Munich Ifo Institute lowered their forecast for the growth of the German gross domestic product this year from 3.7 to 3.3 percent. To justify this, they also referred to bottlenecks in the delivery of intermediate products such as semiconductors.

According to experts, the automotive industry is heading for the lowest point. “We are facing the toughest six weeks,” said Murat Aksel, VW Board Member for Purchasing, recently in an interview with the “Handelsblatt”. The situation should improve again in the third quarter, and competitor Daimler also expects an improvement in the second half of the year. The Boston Consulting Group (BCG) also estimates that the situation should ease from July.

Due to the lack of chips, automakers worldwide produced 1.4 million fewer cars in the first quarter and 1.6 million in the second quarter, the BCG experts calculate. For the entire year 2021, the failures are likely to amount to four to six million vehicles.

The consulting firm Alix Partners in Munich estimates 3.9 million cars. This corresponds to a value of non-produced cars of around 91 billion euros. Lessons from the shortage of chips The car manufacturers have long learned their lessons from the shortage of chips: They are checking their supply chains carefully and are not only expanding their warehousing for chips. After all, the supply chains have thinned out after a pandemic for more than a year, even for important intermediate products, for example in the chemical industry.

Security of supply is suddenly a priority again after years of just-in-time delivery. Chip manufacturers are also taking strong countermeasures and are pushing ahead with expanding their capacities at full speed. In Germany, the new high-tech chip factory from Bosch could provide regional supplies in the future. Where does this shortage of chips come from, which is currently keeping the auto industry and its employees in suspense? With the outbreak of the corona pandemic, demand for cars collapsed and chip manufacturers cut their production plans.

When the demand for new vehicles suddenly increased surprisingly in the summer of 2020, chip manufacturers such as Infineon or NXP were overwhelmed by the demand. The current chip shortage is therefore based on a whole series of misjudgments – on the part of car manufacturers and suppliers, but also on the part of chip manufacturers. However, the lack of chips also shows that the auto industry did not come through the Corona crisis as badly as feared.