After the epidemic, the “lack of cores” has become another problem restricting the development of the global automotive industry. Affected by this, some auto companies in Mexico are facing the dilemma of cutting production, reducing shift time, and layoffs due to supply chain disruption, and local auto workers are also hit hard. It is understood that tens of thousands of auto workers in Mexico have been forced to cut their wages.

　　It is worth noting that the state of Aguascalientes, located in central Mexico, was particularly damaged. The state is one of the largest automobile production centers in Mexico. The chip crisis has forced local factories to close down.

　　Factory shutdown, production cut, employee salary cut

　　As the general manager of Mainsteel of Aguascalientes auto parts company and the head of the state's auto industry development cluster, Cuitlavac-Perez said that about one-fifth of the local auto workers have been unemployed. The income of the remaining employees also fell sharply. According to the contract, many idle workers can only get half of their wages. "This will have a direct impact on the family of employees." Perez said.

　　Chip is an indispensable component for global automakers, involving various systems such as vehicle safety, navigation, and entertainment. With the spread of the new crown epidemic in Malaysia and other places, chip production has slowed down. This has affected the global automakers, making it impossible to satisfy the car supply and demand relationship.

　　In Mexico, many multinational companies have been affected, including Nissan Motor, the second largest domestic automobile manufacturer. The Japanese automaker operates a powertrain plant and an assembly plant in Aguascalientes, producing models such as March, Versa, Kicks and Sentra. According to reports, due to chip shortages, Nissan Motor’s Mexico plant has closed at least five times this year.

　　Nissan Motor said that the last production shutdown occurred earlier this month, where production at the Aguascalientes plant was suspended for 5-7 days; production at the CIVAC plant in Morelos was suspended for 8 days, where the Versa V-Drive sedan was produced. And two pickup truck models, NP300 and Frontier.

　　At the same time, the chip shortage has also affected the assembly plant jointly operated by Daimler (Mercedes-Benz parent company) and Renault-Nissan alliance in Aguascalientes. A Mercedes-Benz spokesperson stated in an email that the COMPAS plant that produces the GLB crossover has experienced "production cuts or suspension."

　　Many auto factories have ceased production continuously, which has brought certain pressure to Mexico’s economic development. According to the Mexican Automobile Manufacturers Association, car production fell by 20% to 3.04 million vehicles last year and is expected to fall by 5% this year. AMIA data shows that since the end of 2019, Mexico's automobile industry with 946,000 employees has lost 16,000 jobs.

　　"Lack of core" brings widespread impact

　　In August of this year, the Bank of Mexico predicted that the suspension of production of cars due to chip shortages may result in a loss of up to 1% of annual GDP growth. Preliminary GDP data for the third quarter also showed that the Japanese economy contracted from July to September, which was the first quarterly decline since the epidemic recovered, partly due to problems in the auto industry.

　　The Mexican subsidiary of the China-based Minth Group is also one of the companies that cut working hours and layoffs. Manuel Ando, ​​director of administration and infrastructure at Mexico's Minth Group, said the company has laid off about 20% of its employees this year. "This is based on previous layoffs. The current number of employees in the company is 1,300, which is lower than the approximately 2,700 before the epidemic," Ando said.

　　"Continuous layoffs are caused by a variety of factors, including tight global chip supply, problems in the logistics chain, slowing production by American customers, and many customers facing worker shortages." Ando said, "Since they have pressed the pause button, Then we must stop too."

　　Dalila Gomez, an employee of the Minth Group responsible for inspecting parts, feels lucky that she still has a job, but the salary cut brought about by the reduction in working hours also made her "tighten her belt." Gomez said that when the factory stopped production, he could only get about half of the average $60 per week. As a mother of three children, Gomez has cut many household expenses, including soft drinks at lunch and Internet services at home.

　　"This is sad because many people, including myself, have families. Some of them are single mothers. They have to support their families and pay the rent." Gomez said, "This affects everyone."

　　"The worst is yet to come"

　　Looking at the world, Mexico is not the only country affected by the “core shortage”. At present, Japanese automakers are forced to reduce production; Germany is working to increase production; the United States warned that due to chip shortages, North American automakers are expected to reduce production of 2.2 million vehicles in 2021, affecting 575,000 jobs.

　　According to the recent forecast by the rating agency Fitch, the semiconductor shortage will continue until at least the first half of 2022.

　　However, some people in the industry have also seen signs of stabilization. Mexico's largest automaker, General Motors, said this month that the company's semiconductor business is improving. "Since February, the first week of November is the first time that a North American assembly plant has not stopped production due to a'shortage of core'." General Motors said.

　　TSMC, the world’s largest chip foundry, also said this month that it will cooperate with Sony Group to build a $7 billion semiconductor factory in Japan to help alleviate the global semiconductor shortage. At present, in addition to automobiles, manufacturers of smart phones, notebook computers and household appliances are also affected by the “lack of cores”.

　　But this did not alleviate Aguas Calientes’ concerns. The automobile industry is the backbone of the local economy, directly and indirectly employing approximately 46,000 and 120,000 workers. Manuel Alejandro Gonzalez, Minister of Economic Development of Aguascalientes, said that nearly one-third of the state’s GDP comes from the auto industry. Anibal Llamas, the quality manager of Minth Group, also worried, "The worst is yet to come."

　　Some auto workers are shocked at the turning point of their fate. A Nissan employee, who asked not to be named, said in an interview that she and her husband both work in the auto industry, and the short working hours have reduced their monthly income. "We have also defaulted on mortgages and other bills, and worries and cravings have replaced our sense of security." The employee said worriedly.