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Shortage of natural rubber compounds vehicle production concerns

First the semiconductor shortage, now a potential rubber shortage could cause even more problems for the U.S. auto industry.

Like the microchip shortage, the rubber supply issue doesn’t have an easy fix either.

Automotive companies have a lot on their plates. Many are turning the corner to electrification and investing billions of dollars. At the same time, they’re dealing with a massive shortage of microchips. Now, there’s concern rubber could be next.

“Rubber is harvested off of a rubber tree, so it’s like any agricultural product -- it’s susceptible to the weather,” said University of Michigan-Flint economics professor Chris Douglas. “So rubber is grown in warm, tropical climates like Thailand, and apparently there’s been flooding there. There’s some leaf disease there, which is disrupting the harvesting and growing of rubber.”

He added that COVID-19 also has disrupted the supply chain of rubber and China may be partially to blame.

“The Chinese economy shuts down, so the demand dries up. No one buys rubber because the factories are shut down,” Douglas said. “Well, their economy reopens before the U.S. economy does, so they try to make up for all that lost production by reupping their stockpile of rubber.”

He said that translates into a supply shortage for the U.S., which could mean higher prices ahead. So don’t be surprised next time if a new set of tires costs a few more bucks than normal.

“The problem is, tires aren’t cheap even in normal economic times. So if you take a $1,000 set of tires and change that to a $3,000 set of tires, that’s a real problem,” Douglas said.