Winter Storm in Texas affects the automotive industry

It seemed that winter storm in Texas had a negative impact on the automotive industry. On March 19th, 2021, Toyota announced that it would halt its factories in Chez Republic for 14 days from 22nd. In addition, Ford Motor also stopped its production in Germany due to the shortage of semiconductors. Other components including plastics were also scarce.

Since 2020, the shortage of semiconductors has been continuing. To get matters worse, severe winter storms affected semiconductor facilities. As a result, supply chain in the automotive industry becomes more unstable.

What happened in Texas?

The 2021 Texas power crisis involved three severe winter storms. They swept across the United States on February 10–11, 13–17, and 15–20, respectively. A massive electricity generation failure in the state of Texas happened. As a result, resultant shortages of water, food, and heat was also occurred. More than 4.5 million homes and businesses lost their power for several days.

Several media including CNN explained the situation in Texas in February, 2021. There were some unbelievable numbers.

  • Dallas dips to 5 degrees Fahrenheit and it was the coldest temperature the city has seen since 1989.
  • Austin and San Antonio both had single-digit temperatures for the first time in more than 30 years.
  • More than four million customers are in the dark across Texas. In fact, Texas is the second largest U.S. state by both area (after Alaska) and population (after California).
  • Weather conditions resulted in more than 550 vehicle crashes for 3 days in the Houston area alone
  • Some 13.5 million people throughout Texas have experienced water disruptions. In addition, nearly 800 water systems reported some issues like frozen or broken pipes.

Climate Change

Some media reported that climate change caused severe winter storms. Therefore, many people as well as business executives understand the severity of climate change more than before. In fact, several surveys showed that climate change is most critical issue for the companies in the beginning of 2021.

In our media, we also report that 2020 was the year to raise our awareness on climate change. However, we have to accelerate our actions to prevent possible disasters across the globe. Even though each one can do tiny things, everyone should think and act against climate change more seriously and proactively.

What is key take away?

When it comes to the automotive industry, manufacturers and suppliers should rethink their supply chain. This is because components of a vehicle is more than 30 thousands. Thus, Original Equipment Manufacturers (OEMs) try to reduce purchase price by selecting few suppliers and increasing the amount of each order. As a result, OEMs rely on few semiconductor manufacturers or suppliers for other components.

Therefore, if some semiconductor makers face any troubles, OEMs should react them and stop or delay their production. Toyota and Ford are good examples in this case. Thus, it is time for OEMs to rethink to choose suppliers and their regions.

Furthermore, climate change is the unavoidable and crucial issue across the globe. We cannot predict what weather condition and where it will occur in the future. How do we imagine the incident that has happened once in 30 years and it will affect global supply chain? Thus, business executives must prepare against future incidents more.