Memo to Michigan House Commerce & Tourism Committee Members — Support, SB 791 (January 27, 2022)

Summary

This is a memo dated January 27, 2022 from David Q. Worthams, Director – Human Resource Policy of the Michigan Manufacturers Association (MMA), to the Michigan House Commerce & Tourism Committee Members, in support of SB 791. The memo says the bill would extend the waiver from the existing work search requirements in the Michigan Employment Security Act because a continued parts shortage is causing longer than expected but temporary layoffs. It says that last year the Act was amended to waive the work search requirement for up to 90 days for employees facing a temporary layoff because of a parts shortage, and that a 90-day waiver no longer provides sufficient protection. The memo states that the bill allows employers to work with UIA to extend the waiver for the rest of this calendar year.

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Full text

MEMO

TO:                   Michigan House Commerce & Tourism Committee Members
FROM:                 David Q. Worthams, Director – Human Resource Policy
DATE:                 January 27, 2022
Re:                   SUPPORT – SB 791
The Michigan Manufacturers Association (MMA) is proud to stand with Senator Ken Horn to
support SB 791. This bill would extend the waiver from the existing work search requirements in
the Michigan Employment Security Act to recognize the continued parts shortage is causing
longer than expected but temporary layoffs. More specifically, the bill addresses the needs of
manufacturers and automotive part suppliers who continue to be hampered by the worldwide
shortage in semiconductor computer chips.

As you know, there has been a shortage of these computer chips since March 2020 when the
COVID pandemic began. COVID forced automakers to shut plants down and temporarily halt
orders from chip suppliers. At the same time, the electronics industry faced increased demand for
all sorts of products (cell phones, televisions, computers, etc.) as people worked from home.
Chipmakers rerouted their supply from the automotive industry to electronics.

When the autos came back online faster than many expected in the summer of 2020, it found that
the chips needed were not available as it takes about three months to make semiconductors with
some additional time needed to retool the plants from making cellphone chips to the legacy chips
needed in automotive vehicles.

Adding to the supply chain stress was a fire at the Renesas Electronics chipmaking plant in Japan
in March 2021. This brought their production to a halt and will take close to 18 months before
the plant gets back to its full capabilities. Keep in mind that many large automotive companies
rely on Renesas as their major source of chips.

We are cautiously optimistic that the number of available semiconductor chips will improve this
year, although admittedly it may be closer to the later part of the year. As a result, the changes
the Legislature made to the Act need to be revisited.

Last year, you amended the Act to allow employees facing a temporary layoff because of a parts
shortage to have the work search requirement waived during the time they are laid off for up to
90 days. The rationale being that, by granting the waiver, these highly trained and skilled
workers will remain with their current employer and not be lost to other industries by being
forced to search for work. This is important for manufacturers as we regularly invest millions of
dollars in training our work force so they are specialized in the technologies of today and
tomorrow. With the chip shortage running into this year, a 90-day waiver no longer provides
sufficient protection.




                 620 South Capitol Avenue • Lansing, MI 48933 • Phone: 517-372-5900 • mimfg.org
                                  Manufacturing Focused. Member Driven.
SB 791 recognizes that while we will have an end to chip shortage this year, we are not quite
there yet. The bill allows employers to work with UIA to extend the work search waiver and
allows this ability for the rest of this calendar year.

We are grateful for Senator Horn’s continued leadership on this issue. We urge you to join him
in supporting SB 791 and reporting it with your recommendation to your House colleagues.




            620 South Capitol Avenue • Lansing, MI 48933-4247 • Phone: 517-372-5900 • www.mimfg.org
                                  Manufacturing Focused. Member Driven.


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