Car production in British factories has fallen to its lowest levels since 1956. A global shortage of computer chips, Brexit, and the coronavirus pandemic have all contributed towards dismal figures. In July 2021, just over 53,000 vehicles were produced, which equates to an almost 38% drop compared to July 2020, according to figures from the Society of Motor Manufacturers and Traders (SMMT).
Demand has remained strong throughout the plights of Brexit and the pandemic, accentuating the effects of the computer chip (also known as a semiconductor) shortage.
The Initial COVID & ‘Pingdemic’ Hit
COVID-19 and Brexit contributed to worker absences. The COVID pandemic temporarily closed car manufacturing plants, and at the same time, many workers from European countries residing in the UK packed up and returned home as their residency rights were removed at the end of the Brexit transition period.
Once UK car manufacturing factories reopened, strict working and distancing guidelines were in force. Many workers were unable to work due to the ill effects of having the virus. Those who became infected but experienced few symptoms were also missing in the workplace and not permitted to re-enter until they were clear of the virus.
As the government introduced the NHS contact tracing app, the country was hit by a ‘pingdemic,’ and those who received a ping were forced into self-isolation. Fortunately, car plant workers who are fully vaccinated no longer need to self-isolate, a change that came into effect on 16th August. However, car production is unlikely to increase while there are long delays for computer chips.
The Shortages & Long Delays For Computer Chips
The microchip shortage is, in many ways, the direct result of our own success. Consumer goods increasingly use computer chips to control their function and give them smart features. Whether it is your kettle, fridge, lights, or smartphone, there are computer chips inside.
The coronavirus pandemic itself increased the demand for chips as people spent more time at home, either working or on furlough. The demand for entertainment products, such as video game consoles, soared, eating up even more of any computer chip reserves that still existed. The release of the PlayStation 5 was of significance and has resulted in companies such as Apple considering staggering the release of new products because initial demands cannot be met.
With many people working from home at the outset of the pandemic, fewer people were buying cars. Microchip manufacturers responded and geared themselves up to prioritise making chips used in entertainment products instead.
Fewer microchips are now available for car production as a result. Some manufacturers, such as General Motors, began to produce vehicles with fewer features to counter the problem, which is also fuelling the second-hand car market. Other car production companies around the world, such as Toyota, have reduced their production by up to 40%.
Why Do We Need The Computer Chips
Computer chips are a vital component of all automotive vehicles, from cars to trucks and buses. The computer chip is the vehicle’s control centre, managing even the simplest tasks, such as the recharging of electric car batteries to the activation, speed, and frequency of the vehicle’s windscreen wipers.
Delays Expected To Continue Until 2022 With A Loss Of £14Billion
Computer chip delays are expected to continue to impact car production into 2022. According to analysts at Goldman Sachs, the automotive industry might see £14bn wiped off of its operating profits by the end of 2021. This is evident as British car exports, for example, fell by more than 37% in July.
Car production is a vital part of the UK economy, accounting for an annual turnover of £78.9bn. The UK currently has a 180,000 strong car production workforce, working for brands such as Land Rover, Jaguar, Rolls-Royce, and Vauxhall. The seventy car models made in the UK, produced by thirty different manufacturers, also support the wider supply chain, which employs 864,000 people.
These statistics are worthy of concern, and the impact of the computer chip shortage could be significant. We might ultimately have to decide which is more important, our electric toothbrush or the car we need to work, shop, and travel.
If the computer chip shortage affects your workforce and production levels, talk to Lindstrom about how our workwear rental, laundry, and industrial wiper rental services can support your business. Our flexible rental solution is tailored to meet your needs as your workforce and production shrinks and grows. Don’t hesitate to get in touch with our team for more information today.