Automotive Heat Treating Slows Due to “Chip” Shortage

Why is the largest heat treating segment in the world, that of automotive heat treating seeing a substantial drop these days?

In early 2020 when COIVD-19 was hitting the world automakers cut back computer chip orders as auto sales slumped which lead to temporary plant closures. Electronics manufacturers, which have enjoyed very strong sales during the pandemic quickly scooped up the excess supply. However since that time car and truck sales have rebounded far sooner than anybody anticipated and automakers have been scrambling ever since to obtain new “chip” supplies in a very tight market. The result has been that all automakers have been forced to close assembly plants in North America, Asia and Europe.

As an example GM recently announced it would shut production at two US plants — in Spring Hill, Tennessee, and Lansing Delta Township, Michigan, in the coming weeks. GM also extended shutdowns at the Fairfax Assembly plant in Kansas City, Kansas, and the CAMI plant in Ingersoll, Ontario, which have both been idled since February 8. And it will continue the shutdown at the Lansing Grand River assembly plant, which has been down since March 15. In addition, GM is halting Chevrolet Blazer production at the Ramos Assembly plant in Ramos, Mexico, during the week of April 19, although that plant will continue to build the Chevy Equinox.

Autoweek Magazine summed us the situation this way; “The chip shortage itself is rooted in the early weeks of the pandemic last spring when the automakers largely shut down, and when suppliers producing microchips for automakers had turned their capacities in the direction of computer and gaming console makers. When the auto industry experienced a sudden bounce-back in most major markets last fall, suppliers were not able to shift away from contracts with these electronics companies, who had experienced rapid growth in consumer demand during lockdowns around the world.

Different automakers have weathered this storm differently so far—some have even stockpiled weeks worth of chips—but the shutdowns at US plants and continued production disruption is expected to continue for months due to these shortages. Some chip makers are already working on expanding their manufacturing footprints, but given the time needed to get new assembly facilities up and running, this is unlikely to have a measurable positive effect for quite some time.

In the meantime, automakers are expected to scramble for chips and endure shortages as the car buying season picks up steam and heads into the summer, just as vaccination campaigns in the US and elsewhere reach a point where demand for new vehicles could seriously ramp up. Just how long these shortages could last is a matter of some debate, but even aside from it, the growth of increasingly complex infotainment systems in cars points to another pressing issue: The semiconductor industry will have to adjust not only to the current shortage, but also prepare for emerging trends in auto manufacturing as a whole, as multiple automakers turn increasingly to tech-heavy electric cars.”

The end result has been that auto parts makers with in house heat treating departments and commercial heat treaters concentrating on the auto industry have in many cases have seen a drastic slowdown in production. One very large auto parts maker and captive heat treater in the US recently told us that in March of this year the company set records for the amount of heat treating they did in house, April in turn is looking to set records for the number of furnaces shut down. This leads to the conclusion that when the chip shortage is corrected the pent up demand for new vehicles will lead to record amounts of auto production and with it a corresponding amount of heat treating.

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