Daimler Trucks North America (DTNA) is rotating downtime at two medium-duty truck plants as the shortage of microchips plaguing the automotive industry finally reaches truck manufacturers. (Photo: Daimler Trucks North America)
Daimler Trucks North America (DTNA) is rotating downtime at two medium-duty truck plants as the shortage of microchips plaguing the automotive industry finally reaches truck manufacturers.
After repurposing some chips, the maker of Freightliner and Western Star trucks succumbed to the inevitability of slowing production.
“This week we began implementing revolving downtime at our Mount Holly, N.C. and Santiago, Mexico plants for M2 and SD production through June of 2021,” a DTNA spokesman said.
“Both facilities remain open and the use of revolving downtime will be used to maintain a reduced level of output, maintain employment levels, and allow the company to move back to full-scale production immediately should the situation be resolved sooner.”
North America’s leading truck manufacturer is not alone.
Demand exceeding supply
Automakers canceled orders for semiconductors that power everything from safety systems to power windows during the first wave of COVID-19 a year ago. Chipmakers diverted those supplies to computers and televisions and other consumer goods. They were in high demand because so many people were spending time at home during the pandemic.
The lead time for chips ranges from several weeks to several months. A recent fire at a major automotive semiconductor plant in Japan has worsened a bad situation.
Volvo Group siblings Volvo Trucks North America (VTNA) and Mack Trucks are bracing for “down days” projected by the parent company earlier in March.
VTNA’s New River Valley plant in Dublin, Virginia, “is affected by the supply chain constraints facing the industry, including semiconductor shortages, as the truck demand is exceeding the supply,” said Mary Beth Halprin, a Volvo Group North America spokesperson.
“The semiconductor shortage is one of a number of supply constraints that we’re monitoring for potential production impact in Q2, she said. “But it’s too soon to speculate on what the impact will be, as the situation is fluid.”
A Mack Trucks spokesperson also described the situation as fluid at Mack’s Lehigh Valley Operations in Pennsylvania. But she said some down days are likely in the second quarter, which begins Thursday.
Minimizing customer impacts
“We’re doing everything we can to minimize the impact. And we are maintaining the flexibility to increase production if the situation allows,” Mack spokesperson Kimberly Pupillo said.
International brand truck and IC Bus maker Navistar Inc. is managing similar shortages and adjusting production schedules to minimize customer deliveries, a spokesman said.
“Electronics components have become vital for the automotive industry,” said Richard Barnett, chief marketing officer at Supplyframe, an intelligence platform for the global electronics value chain.
“This sector and others that rely on semiconductors [need[ to leverage new forms of intelligence to better understand electronics supply chain dynamics and build resiliency into their new product designs and electronic component procurement strategies.”
‘Good time to have trucks’
Fleets are experiencing longer wait times because of supply chain issues and a months-long surge in orders. The industry backlog is at its highest level since March 2019, according to ACT Research.
Fleets are looking for recent-model used trucks as a stopgap until new trucks they have ordered are delivered.
“It’s a good time to have trucks. And it’s a good time to have newer trucks,” Werner Enterprises CEO Derek Leathers told Logistics Management.
PACCAR Inc. (NASDAQ: PCAR) declined to comment on the chip shortage on its production of Kenworth and Peterbilt trucks. But in its 10-K filing with the Securities and Exchange Commission, it suggested some production disruption was likely in coming months.
“The automotive industry is currently experiencing a semiconductor supply shortage that is having wide-ranging effects across the automotive supply chain including some of the company’s suppliers,” PACCAR said in its Feb. 17 filing. “The shortage may have a short-term impact on the ability of the company to deliver products to dealers and customers.”
