Rubber Shortage Deals Automakers Another Blow

Automakers around the US and the world are still trying to figure out how to deal with the shortage of microprocessors. The shortage of microprocessors has been severe enough that automotive manufacturers have been forced to slow or stop the production of some models in many instances. Despite the chip shortage still plaguing the industry, another problem has reared its head.

The new problem is a dwindling supply of rubber. Slow shipping has disrupted the movement of natural rubber, which is a key material used in all manner of automotive components from tires to components in the engine. The world supply of rubber was already running low before shipping issues due to stockpiling by China and a leaf disease impacting production. Rubber prices have risen considerably, and some suppliers are rushing to secure supplies before the market worsens.

In addition to shortages of microprocessors and rubber, other shortages are also plaguing the automotive industry and impacting profits to the tune of tens of billions of dollars. One of the industry's challenges is that it has long operated on a just-in-time manufacturing process to reduce costs, but that left automakers with limited flexibility when the pandemic hit.

The rubber shortage could further disrupt vehicle production as demand is beginning to rebound around the world. Perhaps the more significant challenge with the rubber shortage is that it could take significantly longer for the rubber industry to recover because it takes seven years for trees to mature.

Some automakers seem to be less worried than others about the rubber supply. Ford and Stellantis have said they're watching the rubber situation but haven't felt an impact so far. GM also says it isn't worried about its rubber supply at this time. Tire maker Michelin has resorted to using air freight shipments direct from Asia to get rubber rather than shipping into ports.