Chips Run the World

BY KEITH TUCKER

Special to The Enterprise

Most of us, at some time, have seen pictures of huge parking lots of unfinished vehicles around the automobile assembly plants. And yes, there is a huge stockpile of unfinished vehicles out there. So how exactly did we get here and who dropped the proverbial ball? The answer is simple. No one has a crystal ball that says do this and don't do this.

The problem began when the Covid crisis began and plant executives saw production and sales begin to fall off and issued orders to cut back on supply purchases from vendors, including computer chips. So, these chip factories went out and sought other business to offset this loss. If I understand anything in this world, it is supply and demand, having experienced it for 40 years in business. Simply put, demand is actually pretty constant at the source. That is, things are getting used up at a fairly constant rate. But people's new purchase decisions are based on a multitude of external stimuli.

That is, what people see going on in the world will speed up or delay spending. As it turns out, demand was like water building up behind the railroad levee in Waverly; when people started to buy new cars and trucks again, the levee broke and like an onslaught of water through town, across the country new vehicle purchases went crazy.

So, the auto plants are frantically calling up vendors to place more orders for supplies. The computer chip makers, mostly overseas, could not fill those orders. Now there is another part of this tale of woe. Automobile manufacturers have not updated the kind of chips they use to the latest technology. They are still using chips many times bigger than they have to be. There has been a lot of new technology factories built that make integrated circuit chips that could have filled these orders. But they won't fit into the sockets in these cars and trucks. So, they have to wait for the production lines in these older factories working off older technology to catch up. So, there is the long and short of it.

What lesson is there in all of this? If you have a used car or truck, its value just went up and if you don't want to get left holding an empty bag, stay current on your processes.

Editor’s note: Keith Tucker is a Greenfield resident and owner of The Marble Shop.