Workers' Weekly On-Line
Volume 51 Number 15, May 1, 2021 ARCHIVE HOME JBCENTRE SUBSCRIBE

Jaguar and BMW

Car Industry Shutdowns Due to Crisis in Chip Supply

A shortage in computer chips is having a serious impact on other sectors, particularly the car industry. Jaguar last week suspended production, and BMW stopped producing the Mini for three days from Friday. This has been happening across the industry globally, and has been affecting other goods such as mobile phones and computers.

As recently as January, workers at JLR were forced to move from Castle Bromwich to Solihull in Birmingham to cover shortfalls in production [1]. Then on April 22, the company announced that operations at the Castle Bromwich and Halewood (Liverpool) sites would be affected from Monday, April 26, initially for a week.

JLR is Britain's largest car manufacturer employing 40,000 people. It remains unclear how long the stoppages would last, though management insisted production at the Solihull plant would continue. Tata Jaguar said in a statement:

"Like other automotive manufacturers, we are currently experiencing some Covid-19 supply chain disruption, including the global availability of semi-conductors, which is having an impact on our production schedules and our ability to meet global demand for some of our vehicles".

Globally, chip manufacture consists of a monopolised supply chain that runs from design taking place in the US, silicon wafer production in Japan and Korea, and final fabrication concentrated in Taiwan and Malaysia - Photo: Sky News

"We have adjusted production schedules for certain vehicles which means that our Castle Bromwich and Halewood manufacturing plants will be operating a limited period of non-production from Monday, April 26," said the company.

Likewise, a spokesperson for BMW Oxford said: "As a result of the global availability of semiconductor components, Plant Oxford has stood down three days of production. We are monitoring the situation very closely and are in constant communication with our associates and suppliers."

The BMW Cowley plant in Oxford employs 4,500 people and has been producing 5,000 cars a week. It will be suspended for three working days over six calendar days (Friday April 30 and Tuesday and Wednesday after the bank holiday weekend). As if workers at the site owe the company for the downtime, they will be placed into a working-hours debt under the Working Time Account (WTA) system, which they will have to work back in overtime in order to receive pay to cover the shutdown.

The shortage of chips has been triggered by unplanned-for drops and surges in demand for chips during the Covid pandemic (due, for example, to the closure and reopening of industrial production combined with the shift to home-working requiring computers), which has disrupted supply chains. The car industry's reliance on just-in-time production techniques has made it especially vulnerable.

Globally, chip manufacture consists of a monopolised supply chain that runs from design taking place in the US, silicon wafer production in Japan and Korea, and final fabrication concentrated in Taiwan and Malaysia. However, the manufacturing equipment is itself developed in the US [2]. This delicately balanced supply chain has been thrown out of kilter over the past year, exposing its fragility. In addition, tight profit margins in the semiconductor industry have meant that firms have been reluctant to produce any surplus product.

Such a global system controlled by a small number of oligopolies and big powers such as the US, where most countries have extremely limited or zero capacity to produce chips, is a source of disparity under increasing tension as chips become ever-more ubiquitous. It is also inherently weak as rival oligopoly and associated geopolitical interests vie to control this global supply chain. In particular, the US seeks to block China from becoming freed from this chain or becoming a major force within in it in its own right.

A further significant factor is the domination of chip design by US imperialism and the stranglehold of intellectual property by the oligarchs. The monopolies need to be deprived of their assumed right to deprive the world of scientific advances, allowing the spread of technological development for the benefit of all.

Chip manufacture is a crucial element in a modern socialised economy. They are such an important component in modern devices and appliances that whole sectors of the economies of countries are now dependent on the state of chip production.

In order to build a society that has a degree of control over its economy, the supply of chips has to be guaranteed. Chip manufacture is a foundation industry, and serves other foundation industries that in turn depend on it. Chip manufacture therefore needs investment, while the current situation speaks of its neglect. The direction of the economy must change to support investment in such foundation industries.

Ideally, a modern socialised economy that has a degree of self-reliance would have the capacity to design and manufacture its own chips. Even if there is not that capacity, and an economy has to rely on the global monopolised supply chain, then there is a critical need for contingency planning. What has been revealed is a lack of any stockpiling because of just-in-time techniques. These techniques are employed in the interests of profit-making, rather than a means of achieving efficiency in interests of society. As currently used, these methods have been proven time and again over the past year as being extremely fragile. The fragility of current industrial practices, due to the capital-centred direction of the economy, has been exposed as a major problem.

The workers at Jaguar, BMW and elsewhere should demand that management takes measures to ensure that their production is not fragile in this way. As things stand, they are using the workers to absorb the risk by having these shutdowns and potentially worse. That is not acceptable. Workers should demand that risk is absorbed through proper contingency planning, even if that has an impact on profit margins. Concessions are not solutions, and workers should not be made to pay through loss of earnings or increased overtime via WTA or any other such arrangements.

Further, workers should have a general outlook on the economy from their own independent perspective, and they should be the ones to decide how to ensure its robustness. They should take up the project of building a robust socialised economy, which is not subject to the vagaries and contingencies of the global monopolised supply chain.

1. “Conditions of Workers Under Threat from Owners of Tata Jaguar”, Workers’ Weekly, January 30, 2021
2. “Jaguar Land Rover to suspend work at UK plants amid computer chip shortage”, The Guardian, April 22, 2021


Link to Full Issue of Workers' Weekly

RCPB(ML) Home Page

Workers' Weekly Online Archive