KOKOMO – Every day for the past two weeks I have had to stare two ironies in the face every day. As I drive to work in the morning, I pass the local Chevrolet dealership in Kokomo and marvel at how few new cars are available for sale on the lot. In fact, most days there are five or fewer cars for sale and no pickup trucks.  

In the evening my route home takes me 400 yards south of the Chevrolet dealership. There, on the very corner where inventor Elwood Haynes drove the first American-made internal combustion engine automobile on Pumpkinvine Pike, I see over 1,000 brand spanking new pickup trucks fenced in on the former Delphi Automotive plant parking lot. One might expect the local Chevy dealer to sneak down the road in the middle of the night, cut a hole in the fence and acquire some inventory, but alas, that strategy is foiled by the fact that the vehicles don’t work.  

They lack critical microprocessors that make up one or more of the 1,000 microchips used in a modern vehicle to control brakes, fuel injection, air conditioning, warning lights and, well, you name it.

The second irony is that the Delphi Automotive plant where the pickup trucks are packed bumper to bumper and hub to hub once was one of the largest manufacturers of microprocessors in the world. File this under the category of things that make you go, “huh.”

The United States faces a crisis of massive importance and one that could easily pose an existential threat to our way of life if something is not done soon. The blame for the computer chip crisis should be equally shared by the short-sighted avarice of American industry and by a clueless string of both Republican and Democrat presidential administrations dating back to George H. W. Bush. In addition, Congress has been completely AWOL from the steady deterioration of our computer chip status.

Ronald Reagan identified the critical importance of the United States maintaining our industrial independence in the world of microprocessors. In April 1987, the Reagan Administration imposed 100% tariffs on Japanese firms that were dumping cheap microchips on the American market at below cost and thereby jeopardizing American chip manufacturers.  

The problem with Reagan’s strategy was that it failed to understand that Japanese government and industry work hand in hand as opposed to the American model of our industry being viewed as the enemy by Democrat-led Congresses. At the time, Japan subsidized a substantial piece of our national debt through the purchase of long-term treasury securities. In the first auction of treasury securities after the tariff implementation, no Japanese securities firm participated in the auction and in the wink of an eye, long-term treasury bond interest rates rose by 3%.  

When you are trying to finance trillions in debt, that 3% rise in rates is an economy killer. Quickly, the United States was forced to drop the punitive tariffs and our lower rates returned. I remember thinking at the time how easy it was for a foreign entity to blackmail our country. The adage is darn accurate, “Owe the bank a little and the bank owns you. Owe the bank a lot and you own the bank.”

The first Bush Administration had a different attitude about the exportation of microchip production.  Michael Boskin, an economic adviser to President George H.W. Bush, famously said, “Potato chips, computer chips, what’s the difference?”  

Well, the short answer Mr. Boskin, is to try to build an electronics system for an automobile with a package of Lays potato chips and you’ll get no further than those pickup trucks stacking up at the old Delphi Automotive plant.  

The sad fact is that in 1990 the United State manufactured 37% of all the microchips in the world. Today, that percentage has dropped to 12% and it is heading lower. The direct impact on our automobile industry is that our American automobile manufacturers are expected to make nearly 4 million fewer vehicles this year compared to 2020 all because of the lack of those elusive teeny tiny microprocessors. Bureaucratic tools such as Mr. Boskin should be forced to take public transportation everywhere they go.

The dominant players in the world when it comes to microprocessor manufacturing today are Taiwan and South Korea. Does anyone see the potential problem of the world’s production of such a critical industrial component being so close to China’s doorstep?  

The Chinese Army could swim to Taiwan and South Korea’s Samsung’s chip manufacturing is located within spitting distance of the Korean DMZ. In addition, China has stated their objective to be the world’s largest producer of microchips by 2030. While South Korea plans to spend $450 billion on new microprocessor production facilities over the next 10 years, the Biden Administration’s investment in microchip infrastructure is a paltry $50 billion. This is a financial drop in the bucket in a world where a new computer chip plant can cost up to $20 billion and take three years for the environmental approval process alone.

The Biden Administration’s overriding objective is to convert the majority of United States auto production to electric vehicles by 2035 and therein lies the critical folly of an industrial policy that does not put the interests of our American economy first. Not only will the Biden Administration strategy move the United States from energy independence with our abundant supply of oil and gas, but it will be moving us to the production of vehicles that utilize a component that is rarer than a microchip, rare earth minerals.

If you think we have a supply problem with microprocessors and Chinese dominance, then just wait until you see the hangman’s noose that is being held by China. Electric vehicles are totally dependent on rare earth minerals and China controls nearly 90% of the rare earth market. There is a big reason that Chinese engineers invaded Afghanistan as fast as we cut and ran from the country. They view Afghanistan as a possible new source of rare earth minerals and they want to dominate that market.

The situation that the United States faces today is quite simple and simply frightening. Our largest economic and military competitor controls a major hunk of our ever-growing national debt. They will be the overwhelmingly dominant manufacture of a key component that makes today’s modern vehicles, appliances and electronics function. China almost completely controls the production of rare earth minerals.
 
It is time for our enfeebled president, his handlers and those who run the zoo that we call Congress to form a national strategic council that will ensure that the United States has the resources to sustain our economy, finance our own debt and protect the military superiority that we have enjoyed. We have been slipping backward for nearly 40 years and it is now time that our national interests take top priority.  

You take many things for granted on a day-to-day basis. How many of you worried about the availability of toilet paper in 2019?  Do you remember your fears in 2020 that toilet paper would run out and the shelves in the stores would be bare? Just think of our problems with microprocessors and rare earth minerals as a toilet paper problem that will never go away.  

Be advised, the time to squeeze the Charmin is before it is gone! 

Dunn is the former chairman of the Howard County Republican Party.