LAFAYETTE, Ind. (WLFI) — Two automotive manufacturers are idling production until May 3, resulting in some employees being furloughed.
Subaru of Indiana Automotive and Toyota Tsusho in Lafayette are pointing to global supply chain issues as the reason for the pause. The disruption has shut down automotive plants far beyond Lafayette and has affected international automakers like Ford, Daimler and Jaguar Land Rover.
SIA blamed "an interruption in the supply of certain parts that use semiconductors," while Toyota Tsusho says "supply chain disruptions have led to a temporary pause in some production," according to statements from both companies.
SIA confirmed some employees are furloughed during the halt in production, although it's unclear how many people are affected. Toyota Tsusho did not confirm any layoffs but noted more than 70 people work at the facility.
SIA spokesperson Craig Koven says most furloughed employees will net 90 percent of their usual pay through a combination of benefits.
"It’s important to note this situation is not unique to Subaru," Koven says in an email to News 18. "The global shortage of semiconductors is impacting most, if not all, automotive manufacturers. Although SIA was able to minimize the impact on production for much longer than many peers, the need to offset the parts shortage became a reality. This decision was not taken lightly and was only done after exhausting every opportunity to keep production running."
Ananth Iyer, a professor of supply chain management at Purdue University, says computer chip manufacturers transitioned to supplying the consumer electronic industry after the the auto industry took a big hit during the pandemic.
He says automakers are ramping up their orders for computer chips as the industry rebounds.
"Well, lo and behold, the auto industry saw a very quick rebound and so they went back to the same people, and now they said, 'Hey, we've already started manufacturing for these guys,'" Iyer says.
The supply of semiconductors could take months to rebound, resulting in higher prices for consumers and fewer fully loaded vehicles with lots of electronic options, Iyer says.
"Well, it takes a while to catch up, very much like what happened with toilet paper and paper towels back in March and April but now magnified because this is industrial capacity," he says.