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News Article

Production Halts to Affect 4,500 Workers

By Rodrigo Andrade | Mon, 06/13/2022 - 17:26

On June 15, seven automotive assembly plants in Puebla will pause operations due to semiconductor shortages, a critical problem for many industries over the past years, informed Constantino Sánchez, Minister of the Republican Trade Union Conference. 

“The semiconductor crisis that exists in the country is causing several companies to stop their activities and obviously also affects the economy of Puebla in general,” said Sánchez. These trends will continue during the coming months and affect over 4,500 Mexican workers, who will have to take vacation time or reduce their salary, he added. 

Semiconductor shortages have been a constant problem for the automotive industry especially since the start of the COVID-19 pandemic as IT companies grew during this period. During the pandemic, some semiconductor manufacturers also had to reduce their production capacity. “If we think back to 2020, when sanitary measures were taken to prevent the spread of the coronavirus, vehicle manufacturing suffered interruptions and the industry stopped acquiring semiconductors for a while, due to low sales levels. However, almost at the same time, the demand for these components by telecommunications and electronics companies soared, because people began to acquire various products to carry out their work or educational activities remotely,” said Manuel Nieblas, Manufacturing Industry Lead Partner for Latin America, Deloitte.

Another problem is the dependency on the Asian market to fulfill the necessities of the whole world, as over 80 percent of all the semiconductors come from that region. High demand and limited production capacity have caused several production halts across the globe. To address this problem, a popular suggestion is investing in a broader semiconductor supply chain, but its completion will take time. 

During this period, Mexico must make two major investments to remain competitive and reduce production halts. First, it could improve its technological infrastructure and second, the country could focus on automating processes. 

Photo by:   ranjatm
Rodrigo Andrade Rodrigo Andrade Junior Journalist & Industry Analyst