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Hyundai Plant In Alabama Pauses Manufacturing Due To Car Chip Shortage

Hyundai Motor Company employees put the finishing touches on vehicles in Montgomery, Ala.
Hyundai Motor Company employees put the finishing touches on vehicles in Montgomery, Ala.

No new vehicles will be rolling off the floor at Hyundai Motor Company in Alabama this week due to a temporary shutdown caused by an ongoing global semiconductor shortage.

Semiconductor chips are key components used in cars, for monitoring tire pressure, radios, and climate control systems, as well as other electronics and appliances.

The South Korean automaker's Montgomery-based manufacturing facility employs roughly 3,000 people. Robert Burns, a spokesman for Hyundai Motors Manufacturing Alabama, told WFSA, that between 800 to 900 employees will be impacted by the week-long shutdown that began Monday.

Those workers will not be paid during the shutdown, but are eligible to receive unemployment benefits, Burns said.

The stoppage in Alabama is the latest production interruption caused by the semiconductor industry hit hard by the coronavirus pandemic. Other carmakers, from Ford to Porsche, have also had to press pause on manufacturing.

During the height of the pandemic, when many people were staying home, demand for cars dropped off. Now, that demand is racing back, leaving manufacturers struggling to beef up supply of needed microchips.

A severe drought in Taiwan, the epicenter of semiconductor makers, has also slowed the industry's return to full production. The semiconductor industry is a large consumer of water. It takes gallons and gallons of water to produce a single chip, reports Bloomberg.

Burns said the car company's Montgomery facility was able to temporarily avoid impacts by the semiconductor shortage until this week.

The facility plans to shut down again later this month for its annual summer maintenance from June 26 until July 11. Workers will be compensated for that time off.

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