Recently, a fatal explosion at an Evonik Industries factory caused tremors across the global supply chains for cars, light trucks and heavy-duty (Class 8) trucks, among other products. The Nylon-12 production plant in Marl, Germany, was severely damaged in the explosion and hopes to reopen by winter.
The lack of supply is causing alarm because the chemical resin, PA-12 (a.k.a. Polyamide 12 or Nylon-12), is used to make brake lines and fuel systems. As such a critical component, it cannot be easily replaced. Few companies worldwide produce PA-12, and no equivalent alternatives are known. Substitutes for Nylon-12 will require rigorous testing before implementation.
Europe expected to be first affected
"European users will be the canary in the coal mine for this problem," said analyst Chris Cesaro, in a Credit Suisse report cited by Bloomberg.
As the automotive production region in closest proximity to the German plant, Europe is expected to be the hardest hit by the supply shortage. Because of greater distance from the supplier, automobile factories in areas such as North America and Japan should still have supply of PA-12 en route.
Despite its location in the fallout zone, Germany is expected to be less affected by the shortage, as it can source from Ems Chemie Holding, a supplier in Switzerland.
Detroit distressed over resin shortage
"The shortage is real and immediate," warned William Kozyra, TI Automotive Chairman and CEO, in a memo to customers. Auto industry heavyweights met this week in Detroit to ruminate and discuss the growing concern.
Location and Lean: Opportunity and challenge in East Asia
Like Germany's use of the Swiss supplier, Japan is expected to supplant its Polyamide 12 supply via Ube Industries, Asia's largest supplier of the resin.
Conversely, Hyundai and Kia Motors, based in South Korea, are vulnerable to the just-in-time crisis due to their Lean manufacturing tactics.
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