Have you tried to buy a Playstation 5 lately? Me neither. But I hear they are impossible to get. How about a new vehicle? I tried for several months to get a new pick-up. No can do. Guess why?
No microchips. Overseas factories shutdown during COVID and the demand skyrocketed. These computer chips are needed to power the electronics in newer vehicles and for the computing power in your cell phone and other personal electronics like the crazy popular PS5.
Plus, the pandemic caused a big increase in the need for computers and phones since many of us began working from home and kids started attending school remotely.
From auto parts to eyeglasses, hot tubs to saunas, nearly every manufacturing supply chain process has been disrupted. Unless they build here and with raw materials from the U.S.
Let’s face it, the U.S. consumer has been addicted to cheap things made in China for decades. And now, “due to COVID,” it’s becoming a huge drag on the economy. Too much money chasing too few goods equals inflation. COVID and “free government money” are not done with us yet. Throw in federal unemployment bonuses and you disrupt the job market, too. It’s a mess.
The auto industry will make 1.5 million to 5 million fewer vehicles this year than originally expected. Most of those microchips that make your vehicle go come from Taiwan, which is why China claims Taiwan as its own. And most of the rare-earth elements that make the microchips come from China. You shut down microchip plants over there and you can’t build things here, which is why Intel announced in March that they are spending $20 billion to build two new chip plants in Arizona. Crisis brings opportunity, but that won’t help today.
Steve Zaun, general manager of Puklich dealerships in North Dakota, told me General Motors is 40,000 units behind as of today. He says “in certain models and certain plants, they continue to build trucks and they put dummy chips in them and then they just put them on big lots” awaiting microprocessors. GM did share some good news recently says Zaun, “We just got notification last week that they’re starting to retrofit all of those vehicles and will start shipping them as early as this week.” But when you’re 40,000 units back-logged it will take 10 to 12 weeks to catch up.
Normally you’d see 250-300 new vehicles to choose from at Puklich locations. Now it’s closer to 10, but their customers are adjusting to the change, buying used as soon as they hit the lot or ordering new custom models instead and waiting months for delivery.
Until we embark on an “America First” agenda to build more of what we consume here, even if it costs more, we are held hostage by the Chinese Communist Party. And they are bent on having the No. 1 economy in the world. That will come at America’s expense. Unless we use these COVID supply chain woes as a wakeup call.
Scott Hennen hosts the statewide radio program “What’s On Your Mind?” On AM 1100 “The Flag”, KFYR AM 550, AM 1090 KTGO “The Flag” and AM 1460 KLTC. Email him at ScottH@FlagFamily.com
This column does not necessarily reflect the opinion of The Forum's editorial board nor Forum ownership.