How the chip shortage is hitting Mexican auto workers

AGUASCALIENTES, Mexico — The global semiconductor shortage is hitting Mexico’s auto workers hard as employers slash output, reduce shift work and cut jobs due to supply-chain breakdowns.

The pain is acute in the central Mexican state of Aguascalientes and its namesake capital, one of the country’s top automotive centers, where the chip crunch has forced rolling shutdowns at employers large and small.

The temporary closures have translated into lost wages for tens of thousands of workers here and across Mexico due to furloughs and layoffs, according to interviews with laborers, union leaders and industry executives.

Cuitlahuac Perez is general director of Aguascalientes-based auto parts firm Maindsteel, and head of one of the state’s automotive clusters, which promotes the industry. He said his firm and other Aguascalientes suppliers have been suspending operations an average of seven to eight days per month as carmakers and other parts companies further up the supply chain halt production.

Perez estimates that about one in five local automotive workers have lost their jobs, with the rest seeing big pay cuts since the chip shortages began about seven or eight months ago. By contract, many idled workers here receive half their salaries.

“We are talking about a direct impact on their families,” Perez said.

Semiconductors are an indispensable component for the world’s automakers, who need them for a wide variety of systems such as safety, navigation and entertainment. COVID-19 outbreaks in Asian semiconductor manufacturing hubs have slowed chip production. The fallout has rippled across the globe, with automakers unable to keep production on pace with vehicle demand.

In Mexico, multinationals affected include Nissan Motor Co., the country’s second-largest vehicle producer. The Japanese automaker operates a powertrain facility and an assembly plant in Aguascalientes producing its March, Versa, Kicks and Sentra vehicles. The company has seen at least five shutdowns at its Mexican facilities this year due to chip issues, Reuters has reported.

The latest came earlier this month, the company said, with stoppages ranging from five to seven days at its Aguascalientes plants, and an eight-day closure at its CIVAC factory in Morelos state, which manufactures the Versa V-Drive sedan and two pickups: the NP300 and Frontier.

The dearth of chips has also affected an Aguascalientes assembly plant that’s jointly operated between Daimler and Renault-Nissan. The so-called COMPAS plant, which produces the Mercedes-Benz GLB crossover, has experienced “shift reductions or production breaks,” a Mercedes-Benz spokesperson said in emailed comments.

The turmoil is weighing on Mexico’s economy. Car production fell 20 percent to 3.04 million vehicles last year, and is forecast to drop by as much as another 5 percent in 2021, according to the Mexican Automotive Industry Association. The auto industry, which employs 946,000 workers, has lost 16,000 auto jobs since the end of 2019, AMIA figures show.

Eleanore Beatty

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