A fire at a polymer materials supplier in Germany could hit the supply of vehicle components with a risk to production of vehicles in Europe and wider markets as rival producers and parts suppliers forecast a severe shortage within weeks. OEMs are now working with their suppliers and industry action groups to find a solution to the problem.
The fire broke out following an explosion at Evonik Industries’ CDT plant at the Marl Chemicals Park near Duisberg in the north of the country on 31st March and has caused a complete loss of production for more than two weeks. The explosion led to the deaths of two employees but the cause has yet to be determined. Evonik is helping the authorities with the investigation.
The plant makes a resin used in plastics manufacturing called cyclododecatriene (CDT) that is used in the manufacture of Polymide 12, which in turn has application in a wide range of plastic parts integral to vehicle production, including fuel and brake lines.
“At the moment we still do not have any indication as to the full extent of the damage,” said Evonik in a statement. “While we do expect there to be substantial constraints with respect to our ability to provide supplies of CDT-based products, we are nonetheless confident that we will be able to provide alternative solutions in the form of substitutes such as Vestamid Terra [an alternative product]."
In the meantime, carmakers are faced with the problem of securing inventory to maintain production. Daimler said it was in close contact with its suppliers regarding the situation but that it hadn’t experienced any disruption so far. BMW, Ford and VW also said they had not yet experienced any supply problems, but a spokesman for Opel/Vauxhall told Automotive Logistics News this week that, while it too was yet to suffer any disruption, its suppliers had been hit by the Evonik shutdown and that it had taken the proactive step of setting up a working group to deal with the potential setback.
“We have implemented a global work team comprised of GM purchasing, engineering and suppliers, including Evonik, and are working to allocate and prioritise existing inventories, and also find alternative process material solutions,” he said. “GM is also participating, along with a number of other OEMs, in a summit hosted by AIAG [Automotive Industry Action Group] to discuss cross-industry alternatives and solutions.”
However, suppliers of the PA12 polymer in other markets, including Asia, have already reported an increase in orders, something they may be unable to meet because they are already running at full capacity.
According to a report from Bloomberg, Ube Industries, based in Japan, which is Asia’s largest provider of the polymer, said it had received an increase in orders but that there was no room to meet the demand because of existing orders. Ube told Bloomberg that there would be a supply shortage and was joined by parts supplier TI Automotive, which forecast a “severe” shortage within weeks.
The latest incident raises the problem of the supply of specialist materials from exclusive sources along the tier chain, as was dramatically revealed in the wake of the Japanese earthquake last year and its impact on suppliers such as Renesas Technologies in Japan.
That event revealed a lack of visibility between many carmakers’ tier one suppliers and those at the tier three and four levels, most of which tend to be more concentrated by specialisation and region. The crisis showed that even if an OEM had multiple tier one sources, those tier ones were likely to share the same lower tier suppliers, and thus be equally impacted by disruptions to supply.
Comparisons with the supply problems following the Japanese earthquake are too premature according to Opel/Vauxhall [and may pale in comparison] but the carmaker’s spokesman said that it had learned a lot about effective crisis management in the supply chain from the crisis and applied that knowledge every time it had a global supplier issue.
“This situation is of concern because the resin material is used across multiple industries and that is why we are working with suppliers and also have conversations with other OEMs,” he said.
Similarly Daimler said that last year’s incidents, including both the earthquake and the floods in Thailand, had put the entire automotive industry through “an involuntary stress test”.
“For Daimler, we have been able to gain valuable knowledge from [the crises],” said a spokesman for the carmaker. “For example, on where we can position ourselves in an even more robust manner, in which way suppliers are dealing with such incidents and [what sort of] transparency we and our partners have regarding the supply chain, including tier-n suppliers.”