The chip crisis is not a short-term crisis”

The chip crisis is not a short-term crisis”

Automotive industry: The auto industry is suffering from delivery bottlenecks. How could it come to this?

Sebastian Kummer:This crisis has several causes. First of all, there is a general chip shortage because too little has been invested in recent years to keep up with the increasing demand due to rapidly advancing digitalization. This was exacerbated by Covid-19: on the one hand, there were production and delivery failures, and on the other hand, electronic products were in greater demand during the crisis. Another problem is that we have relied too heavily on chip production in Asia. We must strengthen the production of microchips in Europe. Infineon's investments in Villach are one of the praiseworthy exceptions. 

But why is the auto industry suffering more than other industries?

On the one hand, this is because car manufacturers have paid too little attention to the procurement of microchips. Some of these were purchased indirectly through intermediaries. The biggest mistake, however, lies in misjudging the impact of the Covid-19 crisis. The auto industry has assumed a sharp decline in demand and has canceled orders for computer chips. The chip manufacturers have reorganized accordingly and made these capacities available to the electronics industry. In addition, many car manufacturers underestimated the consequences of the strong shift in demand towards electric vehicles. These require significantly more chips. The mixture of both factors has now been the last straw. 

How long do you think this situation will last? Many experts had already predicted relaxation for this summer...

I had already pointed out in interviews at the beginning of the year that the chip crisis is not a short-term crisis, but a medium to long-term crisis. The creation of new chip factories requires very high investment amounts and a lead time of at least three, more likely five years. Since the chip factories produce 365 days / 24 hours, short-term increases in production volumes cannot be achieved. In addition, some consultants have indeed made completely false statements. When I asked that European politics should promote microchip production in Europe more, the IHS Economic Institute responded that they consider this to be completely unnecessary. To this day I can't see any real change in thinking. 

What are the lessons from the misery? Is just-in-time logistics a thing of the past and should inventories be built up?

Of course, just-in-time logistics have been exaggerated in some places, but the chip problem is not a just-in-time problem, but a problem of industry miscalculation. If there had been a month more inventory, it would have made little difference to the overall situation. Nevertheless, we have to rethink inventory levels and also ensure that we have better control of the supply chains through regional or at least European delivery. 

One advantage of the chip misery: Counterproductive things like overproduction and discount battles have been put to an end, so that more can be earned per car again. Have you learned from the situation? 

In fact, many companies are learning that you can make more money by behaving differently. Container shipping is currently more profitable than the digital giants. Even though, as we all know, hope dies last, I believe that companies are learning from this crisis and that it is better to operate sustainably with reasonable prices than to gain market share at any price. 

During the first lockdown you were trapped alone on a sailing ship in the Mediterranean for weeks and have now written a book about it. What were the biggest lessons from this involuntary self-experiment?

My crisis management strategy – with patience and humor – has been outstandingly confirmed. Luckily, I'm also a big believer in the school of clear thinking. Alone at sea you have to analyze things soberly, and hardly anyone in the world was as safe from Covid-19 viruses as they were after 67 days alone at sea or hidden in bays without going ashore. The absurdity of the entry bans against me can also be understood with a good general education, e.g. B. taking into account the existentialism of Camus or the theater of the absurd, can be better tolerated. Of course, it is always important for management - but especially in times of crisis - not to allow themselves to be infected by the general panic, but rather to soberly analyze the effects of the pandemic on the business. It is very important to think in scenarios and maintain options for action. “Safety first” applies to shipping, and I think that this should also apply to companies in crisis. 

Last question: What kind of car do you drive privately?

I haven't had a car for seven years, but at my wife's request I bought a used VW Passat 1.6 liter Blue Motion in March, and I'm really impressed by its low diesel consumption. I am also firmly convinced that it is at least as sustainable as modern electric vehicles. 

Book tip:

Jens Brambusch and Sebastian Kummer: With grief without worries. When Corona comes, the crew leaves. All borders are closed. The odyssey begins. Independently published.