We all know that certain sectors of the global economy continue to suffer from the effects of the pandemic, but UK car production is really feeling the pain. June was the second lowest production for that month since 1953 and now July’s production of 53,438 vehicles is the worst for that month since 1956, down 38% on last year.
Hit by the almost perfect storm of staff and chip shortages, car manufacturers are struggling. In the UK, the so called “pingdemic” had a big impact as the National Health covid app “pinged” workers instructing them home to isolate during July. Although new government rules brought in during August should help alleviate the staff shortage, the chip shortage is far from over.
Malaysia has emerged as the major player in chip production especially the testing and packaging, which is the last phase of semiconductor production. Electronics and electrical products account for 39% of Malaysia’s exports according to data from the Ministry of Trade.
With Covid-19 shutting Malaysian plants, seven-day average daily infections pushed up through 20,000 earlier this month from 5,000 in late June, the shortage of chips looks to continue. The government is on a massive vaccination programme with officials working with large companies to vaccinate entire staff, endeavouring to keep the economy open after a third shutdown.
Not only UK car production is struggling: Ford announced it will suspend production of its F-150 pick-up truck at one US based plant due to a semiconductor related part shortage and Nissan and General Motors has warned of component shortages due to Malaysia’s lockdowns, with the Japanese carmaker shutting down production lines at two of its facilities.
Elsewhere, we await the thoughts of Fed Chair Powell this evening UK time, 10 am Washington time, to see if any further clues are forthcoming regarding a taper timetable. We shall report after the long UK weekend with our last UK bank holiday Monday until the December holidays arrive.
Have a good weekend, longer for some.