(WXMI) — Supply chain issues have been plaguing the U.S. economy for well over a year now. In Michigan the automotive sector is especially impacted.
In the past week alone, a shortage of the all-important semiconductor chips is causing some automakers to slow production.
Meanwhile, a bill aimed at addressing some of those issues faces a fight in the Senate after passing the House Friday.
“The automakers can't produce enough cars right now because they don't have enough chips. But it's also some of the the critical components for our military. We need to make sure that we control as much of the supply chain as we can here,” says U.S. Deputy Secretary of Commerce Don Graves.
Right now, only 12% of the world’s chips are made in America.
The $350 billion COMPETES Act, which passed the House largely on party lines Friday, would provide more than $50 billion to produce more chips in the U.S. and more than triple that in funding for scientific research and innovation to address supply chain problems.
House Republicans voted against the package because it included provisions that weren’t directly related to increasing the U.S.’s competitiveness with China. The legislation will likely face a fight in the Senate for the same reasons.
“It ended up being over 2,900 pages with just dozens of extraneous provisions that had nothing to do with increasing America's research and development capacity, because that's where we've been falling behind,” says U.S. Rep. Peter Meijer (R–Grand Rapids), who voted against the bill.
Meijer says he supports some of the individual proposals, including the CHIPS Act, but couldn’t support what was all bundled together with it.
“There was a bipartisan bill that included the CHIPS Act that came out of the Senate, right? So that's a pretty high hurdle in order to get through, instead of introducing that onto the floor of the House so we can vote on it and send it to the president for a signature. Speaker Pelosi put together her own package,” Meijer said. “It's really frustrating that what should be an area of strong bipartisan agreement instead became a partisan exercise,” he added.
Even if the legislation is passed and signed into law fairly soon, it could be years before more chips are made in the USA.
“That industry can take a year or sometimes as long as three years to get itself into gear,” says Brian Long, Ph.D., director of Supply Chain Management Research at Grand Valley State University.
“The auto industry is effectively limited right now to 80% production, simply because of a few $15 chips that are necessary to put the cars together that they've engineered,” Long said.
“They have vowed that they're never going to get caught with that again and some of them are looking into, again, getting to their buying and creating their own high-tech suppliers so that they don't have a shortage and so that the chips are literally right down the street, if you will, from the production plants,” Long added. “However, this is going to take time for this to happen. You don't build these kinds of factories overnight. And once again, we have to have the technicians to do it. Part of the new legislation is just that.”
For that reason, Long is hoping lawmakers can come to an agreement soon.
“We need these people now and we need this investment in high-tech education now. But we're going to have to wait for it.”
Though it’s not all doom and gloom. Long, who conducts studies on the local supply chain, says the economy is “very much positive” right now, but he does say things would be a lot better if some issues like the chip shortage are addressed sooner than later.