Resin plant blast in Germany may restrict global auto output

It’s not as traumatic as last year’s earthquake and tsunami in Japan, but a deadly explosion at a German resin supplier could soon force automakers to cut production at selected plants because the resin is essential to make fuel and brake lines.
Auto industry leaders met in Southfield to explore alternative sources for the component CDT, a chemical that is critical to the production of a plastic resin called Nylon 12 or PA-12.
Research firm IHS Automotive projected that shortages of the chemical, which was already in short supply, are “likely to be serious” and could curb vehicle production. The March 31 explosion killed two workers at supplier Evonik Industries in Marl, Germany.
General Motors confirmed that some of its suppliers have been affected by the disruption, and other auto companies said they were assessing the situation.
“Vehicle manufacturers and suppliers are all in disaster-recovery mode right now to protect their production schedules,” said David Andrea, senior vice president of industry analysis and economics for the Original Equipment Supplier Association.
“We’re too early in the process to know what kind of short-term production impact there will be.”
Andrea said the industry had been trying to find alternatives to the resin before the crisis.
The disaster revealed the auto industry’s heavy reliance on a seemingly minor component. Experts said it also carried echoes of the 2011 crisis when the Japanese earthquake and tsunami disrupted the industry’s global supply chain.
Evonik and one of its customers, Arkema, whose Nylon 12 production has already been disrupted, account for about half the resin’s worldwide output, said IHS Chemical analyst Paul Blanchard. He projected that Evonik wouldn’t recover its full production capacity for at least six months.
“In the short term, auto and truck production will be affected,” Blanchard said. About 200 industry leaders sought to identify possible substitute components at a summit organized by supplier TI Automotive and the Automotive Industry Action Group. AIAG plans to host follow-up meetings to implement recommended responses to the crisis.
Some of GM’s Tier One suppliers “have had exposure” to the plant explosion, but it is too soon to project whether it would affect production, GM spokeswoman Kelly Cusinato said in an e-mail.
“We have implemented a global work team, comprised of GM purchasing, engineering and suppliers, including Evonik, and are working to allocate and prioritize existing inventories and also find alternative process material solutions,” she said.
Speaking to reporters at an event in California, Ford CEO Alan Mulally called the problem widespread and said it was unclear whether it would crimp production.
Chrysler confirmed that Evonik is one of its sub-tier suppliers, but spokeswoman Katie Hepler said the company does not anticipate production impacts.
Mike Goss, general manager of external affairs for Toyota Motor Engineering & Manufacturing North America, said the Japanese automaker is assessing the impact to its supply chain.
“Until the assessment is complete, we do not know if there will be an impact on production,” Goss said in an e-mail.
Free Press Business Writers Alisa Priddle and Greg Gardner contributed to this report.
Free Press Business Writers Alisa Priddle and Greg Gardner contributed to this story. Contact: Nathan Bomey at 313-223-4743 or nbomey@freepress.com. On Twitter, follow @NathanBomey or @freepautos.