Semiconductor chip shortage is hurting El Paso car dealerships and Juarez auto maquiladoras

Border business leaders call for relocation of chip production from Asia, warning fallout will continue until 2022

Ford pickup trucks built without computer chips are shown in a parking lot in Dearborn, Michigan on Tuesday, May 4, 2021. Automakers cut production as they grapple with a global shortage of computer chips, making dealerships nervous . (AP Photo / Paul Sancya)

EL PASO, Texas (Border Report) – What Jon Barela saw on a recent trip to the Midwest put the semiconductor chip shortage in context: thousands of new cars parked in factories instead of go to dealers.

“They’re fully assembled, but they’re missing computer chips. This has a negative effect on our economy, ”he said.

The president and CEO of the Borderplex Alliance says the effects of the shortage – caused in part by COVID-19-related disruption and supply chain issues – can be felt across the country. North America.

“Many of our investors are involved in the manufacturing industry and they have been hit very hard by the shortage of semiconductors for their products,” he said. “We also have retailers. Those who sell cars… their supply base has been very limited in recent months. Very little car inventory is coming in due to semiconductor inventory shortage. They expect this to happen until 2022. “

Across the border in Juarez, auto-related maquiladoras have slowed production and some have cut back on their employees’ hours.

“I can’t cite exact losses, but production tends to go down,” said Thor Salayandia, president of the Juarez Chamber of Industry and Manufacturing. “Production is down by 10, 20, 30, 50%, depending on the industry. “

Barela said the shortage is not only an economic issue, but also a potential security issue in the United States. “Airplanes, military equipment, everything is based on the use of semiconductors. This shortage affects not only American companies, but also our military force, ”he said.

The painful lesson supports the case for rebuilding semiconductor production in North America, he and others say. Most semiconductors are made in Asia today, while production was centered around the United States before the turn of the century.

“There is an urgent need to diversify this important supply chain of vital semiconductors in North America. There is no better place than the border region to manufacture computer chips, ”said Barela. “We are working very hard to get the attention of semiconductor manufacturers, so they are looking at our region, our unfavorable environment with risks to expand or relocate.”

Such production facilities would likely be built in Juarez, where many subsidiaries of US Fortune 500 companies operate factories. Juarez business leaders are all in favor of the idea of ​​relocating semiconductor production. However, it will take time – at least two years after someone comes up with a concrete plan, Barela said.

Meanwhile, business leaders on both sides of the border expect the collateral damage from the shortage to continue until 2022.

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