Paint makers are also feeling the chip shortage

Semiconductor shortages are affecting companies that do not directly depend on computer chips, cutting sales of glass, paint and industrial sandpaper.

Large users of chips—including automobile, smartphone and appliance makers—are also major buyers of other materials such as paint and glass. As production of finished goods falls due to chip shortages, those companies are also cutting back on purchases of several other components, officials from supplier companies said.

3M Co., Axalta Coating Systems Ltd. and Corning Inc. said this week that semiconductor shortages were affecting their sales, as key customers produced fewer vehicles, washing machines and appliances.

Companies that provide services to manufacturers, such as water-management company Ecolab Inc. and train operator Union Pacific Corp., are also being affected. Union Pacific said shipments by car and car-part makers fell 18% in its third quarter.

Paul, Minn.-based 3M, which manufactures grinding wheels used to lubricate metal and films that illuminate electronic displays, said chip shortages spread to a wider group of its customers. Which also includes makers of vehicles and smartphones.

“Those are important markets for us. We’re seeing a shortage of semiconductors,” said the company’s chief executive officer, Mike Roman. The company said some of the decline was offset by auto manufacturers using handheld chips to build more high-end vehicles, which have additional electronics and larger screens.

Semiconductors have been hard to find after consumers order everything from hot tubs to ATVs faster than producers can. Chip makers had already focused on producing more profitable, state-of-the-art chips than the simpler ones used in everyday products, and supplies were tempted by a factory fire in Japan and severe cold around Texas. Supplies were disrupted from practically inactive factories. Manufacturers have said that it usually takes years to add enough new chip-production capacity.

Since the end of last year, car manufacturers began to cut production. According to the Federal Reserve, US manufacturers assembled 7.8 million vehicles in September, up from about 10.8 million a year earlier. According to federal data, home appliance production also fell from June to August and from August to September.

Glassmaker Corning said the semiconductor shortage cost the company $40 million in sales in its latest quarter, as its customers made fewer cars. The number of televisions sold declined by about 10% year over year, the company said, which has also taken a toll on revenue.

“This decline in production began to impact us in the middle of the third quarter, and we expect it to continue through the fourth quarter,” Corning’s chief financial officer Tony Trippenny told analysts, referring to car production.

Some companies said the situation was worse than they expected. Automotive supplier Dana Inc. on Tuesday cut its revenue estimate from $100 million to nearly $8.9 billion, citing chip shortages.

“Supply chain conditions were expected to improve marginally and the chip famine was considered to progressively ease,” Ohio Company Chief Financial Officer Jonathan Collins told analysts. “Unfortunately, none of this came to fruition.”

Manufacturers said there’s not much they can do to mitigate semiconductor shortages. Some said they were focused on meeting the demand that exists, finding new customers for products and maintaining that had been delayed during the recent periods of high demand.

Ecolab, which helps manufacturers manage water use, runs automotive paint rooms and makes cleaning products, said it was feeling less demand as well.

“The chip shortages that are happening have nothing to do with our own operations, but are driving down demand,” CEO Christoph Beck said. “It’s something we can’t control, obviously.”

Paint and coating maker PPG Industries Inc. said earlier this month that semiconductor shortages overtook its car customers, which also affected production of heavy construction equipment and equipment. The Pittsburgh-based company said it does not expect things to return to normal until the second half of next year.

CEO Michael McGarry said: “Some of these things have a lot more chips than people, like appliances.”

United States Steel Corp said on Friday that some of its car customers plan to increase production rates over the next six months, starting in November.

“We are pleased to hear from many auto customers that chip shortages may be behind us,” said CEO David Burritt.