DEARBORN, Mich. (AP) — The auto industry may have steered
its way around another crisis, avoiding a second major disruption of
its supply chain in a year.
Just last week, automakers and parts
companies feared that factories could be forced to close due to a
shortage of a key plastic resin. Supplies are low because a March
explosion and fire knocked out a German factory that makes much of the
world’s PA-12, a unique resin used to manufacture fuel lines and other
parts. The plant could be out until winter.
But on Friday, Ford
gave the strongest indication yet that problems may be avoided. The
automaker’s chief financial officer said he doesn’t expect any Ford
factories to be stalled because of the shortage. That is largely because
the company has substitutes for PA-12.
"We think we’ve gotten
past that graveyard," CFO Bob Shanks told reporters after Ford’s
first-quarter earnings announcement. "We think we’re going to get
through this without any issues."
Ever since the German plant was
damaged in the blast, automakers and suppliers have been rushing to find
substitutes for PA-12. The plant, owned by Evonik Industries, made at
least a quarter of the world’s PA-12, and up to 70 percent of CDT, a key
ingredient used by other companies to make the resin.
All four of
the world’s major PA-12 suppliers have told customers they won’t be
able to keep supplying them with the resin. PA-12 is unique because it
doesn’t absorb much water, so it can carry gasoline and other fuels
without deteriorating like other plastics. PA-12 is used in fuel and
brake lines as well pipelines, and household and sporting goods.
Initially,
parts-making companies told automakers to expect production stoppages
because they couldn’t make enough parts that need PA-12. Automakers
worried the shortage could cause parts factories to close, cutting off
supplies just like in 2011, when an earthquake struck Japan. Companies
ran short of paint pigments and electronic parts back then. As a result,
Honda and Toyota were forced to cut production and their dealers ran
short of cars and trucks.
But Shanks said that Ford has worked
with parts suppliers to develop alternative materials that can carry
fuel and other liquids without problems. Some of the plastics were in
the works before the plant explosion, while others are still being
tested. Parts made with the replacement resins will be checked
thoroughly, and car buyers shouldn’t notice any differences, Shanks
said. "For the consumer, they’re not going to have any issue in terms of
safety or durability," he said.
Other automakers and large parts
companies probably have similar substitutes, so it looks like the
industry won’t be severely harmed by the shortage, said Steven Wybo, a
managing director and automotive expert at Conway MacKenzie, a
consulting firm that handles industry restructurings.
If Ford has alternative supplies, other automakers "are either out in front or
right behind them," Wybo said.
Other major automakers said Friday that they’re still evaluating the shortage and
have not seen any production cuts yet.
Last
week, Chrysler CEO Sergio Marchionne told CNBC in Beijing that there is
a better than 50 percent chance the company will find alternatives.
General Motors CEO Dan Akerson said the company had enough inventory of
PA-12 parts to get through May, and a spokeswoman said Friday that GM
continues to work with suppliers on substitutes.
Honda, Toyota and
Nissan also said they haven’t had any factory disruptions. Honda says
it also has alternatives and Nissan said it also is working on them.
Several parts makers also said this week they were confident there
wouldn’t be any production problems from the shortage.
Fears of
parts shortages and auto assembly plant shutdowns were so high that
about 200 industry officials attended a meeting last week to talk about
testing alternative plastics.
The industry still has to go all-out
to find substitutes and it still must prepare for factory closures,
said J. Scot Sharland, executive director of the Automotive Industry
Action Group, a trade association that organized the meeting.
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AP Business Writer Yuri Kageyama in Tokyo contributed to this report.
Copyright 2012 The Associated Press.