It’s been argued that the beating of a butterfly’s wings in Africa could trigger a hurricane in New Orleans. Anyone who wonders about the theory of consequences only has to look at how last year’s tidal wave in Japan and a flood in Thailand nearly brought the global industry to its knees – repeatedly.
Now, it seems, the industry is facing another potentially serious threat. A March 31 explosion and fire at a German plant run by Evonik Industries AG threatens to result in a severe shortage of a critical resin, known as PA-12, needed for a wide range of automotive parts and components – from fuel tanks to seat fabrics.
As many as 200 automotive industry representatives were expected to meet at a secret location in the Detroit suburbs today, according to several of those participating, to discuss the issue and try to hammer out an industry-wide strategy for dealing with the shortages.
In a letter to customers last week, Bill Kozyra, chairman of TI Automotive, warned, “The shortage is real and immediate. The possibility of production interruptions at some of your facilities in the next few weeks is high.”
Even manufacturers and suppliers who don’t use the resin directly are likely to find it in their plants in the form of parts produced by their own suppliers, industry officials caution.
The explosion at the Evonik plant killed two employees and not only impacted production of the key resin but also destroyed the production equipment for CDT, one of the key chemicals for producing the PA-12 resin. With Evonik one of the most essential suppliers of CDT used by other PA-12 manufacturers it is unclear if alternative sources can be found – and, if so, how quickly they could ramp up production to cover for the losses.
While Ford and Chrysler have so far felt no impact, General Motors this week revealed that some of its suppliers are already running into problems. It is doing a global search for alternatives and GM officials say it is too early to say for sure if it will face production cuts on some of its own assembly lines.
The Evonik crisis worsens an already serious problem. Demand for PA-12 resin has threatened to outstrip supply for several years as the auto industry began rebounding from its 2009 global crash.
The latest crisis follows the massive disruption felt by the auto industry – primarily Japanese manufacturers – in the wake of the March 2011 earthquake and tsunami that devastated much of northeastern Japan. Even Western manufacturers were impacted by shortages of key electronic components produced in the region.
Then, last autumn, flooding shut down scores of assembly and parts plants in Thailand, again leading to global production cuts.
Industry leaders have been increasing their scrutiny of parts, components and raw materials that come from single suppliers – which could leave the automotive world vulnerable to future supply disruptions.