Tipton Transmission Plant on March 3, 2020 with Roger Hawn, Patrick Kemper and Patrick Burns working on the 9-speed transmission assembly line. Staff file photo by Tim Bath
A global shortage of microchips has led Stellantis to furlough about 1,800 local workers building 9-speed transmissions.
The pandemic-fueled chip shortage started when consumer demand soared for more vehicles as people looked to avoid using public transportation. Demand also spiked for devices like smartphones and gaming consoles that people use for entertainment while stuck at home.
The shortage is now having a major ripple effect through the automotive industry, with companies like Ford, Subaru and Honda pausing production at some plants due to a lack of chips.
In January, that ripple effect hit then Fiat Chrysler Automobiles, which paused production of the Jeep Compass. The vehicle is assembled in Toluca, Mexico, and uses the 9-speed transmission.
That led Stellantis, which merged with FCA last month, to halt production of the 9-speed in Kokomo and Tipton for the first two weeks of February to avoid an overbuild of the transmissions.
Now, about 1,800 workers at the all four local plants are on furlough through the end of the week.
However, all four plants continue to operate, producing other components like the 8-speed transmission during this time, company officials said.
How long the chip shortage will continue is unknown, but it’s likely not to let up anytime soon.
Computer chip makers are running at maximum capacity and it’s not feasible for companies to build factories to compensate for the increase in demand, Bloomberg has reported.
With not enough chips in supply, the auto industry could lose $61 billion in 2021, the consulting firm Alix Partners told Bloomberg.
Haig Stoddard, senior analyst for Wards Intelligence, told the Detroit Bureau that the chip shortages could trim anywhere from 15,000 to 20,000 units of the industry’s production schedules in North America.
As for the Kokomo plants, Stellantis said, it will continue “working closely with our global supply chain network to manage the manufacturing impact caused by the global semiconductor shortage and will make adjustments as necessary.”
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