Commercial Motor Vehicle Manufacturers Want Prompt Solutions from Biden Administration

Commercial Motor Vehicle manufacturing leaders appear to be growing impatient about the lack of domestically produced semiconductor chips, and they are putting subtle pressure on the Biden Administration to fix the persistent shortage.

“(Re-shoring chip production) will help our industry, adding much-needed local capacity for the medium to longer-term,” a statement from Volvo Trucks North America reportedly states. “To mitigate the short term, we would like the administration’s support to recognize the essential importance of commercial vehicles.”

Paccar truck deliveries across the Kenworth, Peterbilt, and DAF models are predicted to decline by 7,000 vehicles from the second to the third quarter of 2021. Industry leaders largely point to a lack of semiconductors required to complete vehicles and fill backlogged orders.

“Paccar anticipates that the semiconductor shortage and associated production inefficiencies will continue in the fourth quarter,” the company reportedly wrote in an official statement. “Paccar’s third-quarter 2021 truck deliveries are estimated to be approximately 33,000 vehicles, compared to 40,100 vehicles delivered in the second quarter of 2021.”

According to wide-reaching reports, all of the four major commercial motor vehicle manufacturers are frustrated with having to red-tag partially completed trucks. Waiting for the chips that complete safety systems and onboard technology, truck makers are scrambling to find space to store unfinished models.

The truck-building ecosystem has reportedly been starved by the lack of chips, and unfilled demand prompts manufacturers to raise prices. Even late-model vehicles are experiencing what many view as unprecedented price hikes that trail back to the semiconductor shortage. Class 8 vehicles reportedly need anywhere from 15 to 35 chips each, depending on technology.

But not all trucking industry experts agree that re-shoring semiconductor plants is the most effective solution. Rebuilding the once robust U.S. chip-making industry would likely take upwards of 12-18 years before the country could eliminate the reliance on foreign corporations.

“Re-shoring semiconductor capacity probably would have no meaningful impact on trucking,” FTR Transportation Intelligence vice president Avery Vise reportedly said. “First, it would not be a quick solution. By the time we saw significant re-shoring, we undoubtedly would see normalized production in Asia and elsewhere.”

While trucking industry leaders and the federal government appear to understand the timeline, long-term efforts are underway to cure the economic conditions. For example, a reported $52 billion is being poured into chip-making via the U.S. Innovation & Competition Act. Those federal funds include $2 billion for automobile and heavy truck manufacturers. While heavy-duty truck manufacturers may not see the fruits of that investment for up to a decade, the need for additional Class 8 vehicles is likely to grow.

“I think the industry is responding appropriately in terms of looking at some of these problems. And there are different solutions to this, but I’m optimistic that once we get through this, we’ll have a healthier supply chain than we had coming into it,” Semiconductor market expert and IHS Markit senior analyst Phil Amsrud reportedly said. “We didn’t know how fragile the supply chain was until essentially COVID showed up and, in a sense, stress-tested and broke part of it.”

Sources: ccjdigital.com, freightwaves.com