North American commercial vehicle production could face further disruptions, as the Omicron variant of Covid-19 puts increased strains on staffing across U.S. and global economies, ACT Research reports.

“Minimally, the world should be planning for a January of meaningful labor disruption, and by extension, increased manufacturing challenges, locally and globally,” said Kenny Vieth, ACT’s president and senior analyst.

“Low-cost manufacturing countries with low vaccination rates have had trouble in previous Covid waves. The Delta variant knocked Indian steel production off-line and disrupted automotive sub-assemblers in Southeast Asia. To combat Omicron, the Chinese government has instigated shelter-in-place quarantines, continuing their strict lockdown policy. As China remains the world’s workshop, Chinese parts suppliers and ports going off-line is a real short-term risk.”

Commercial vehicle build rates continue to lag demand, ACT reports, but some medium-duty truck makers have reallocated chips from pickups to larger GVW vehicles.

“That allowed some additional incomplete units to be finished into year-end. With fewer components requiring semiconductors, trailer production also showed some modest traction into year-end, suggesting some easing in commodities capacity,” said Vieth. “It appears that the industry will begin 2022 with still unfinished 2021 units. At the levels we suspect, this is an unprecedented situation.”