Plastic resin makers have worked for years to establish their products in the lucrative automotive market. Now, the crippling strike at two major General Motors Corp. plants in Flint, Mich., is proving there are two sides to that shiny coin.
``We didn't see it in the first couple of weeks, but now we're seeing some canceled orders, especially from Tier 1 suppliers to GM,'' said Raj Mehta, engineering resins business director for BASF Corp. in Mount Olive, N.J.
Mehta estimated BASF's nylon sales have dropped about 5 percent because of the strike. About 40 percent of North American nylon output is sold into automotive.
The concern sounded by Mehta and other plastics executives is a definite sign of plastics' presence in the automotive market. A recent University of Michigan study indicated that plastics are used in more than half of all instrument-panel skins, instrument-panel retainers, door-trim panels, interior-trim panels and air-bag doors.
The strike is changing the pace of orders at Exxon Chemical Co. but has not had ``a catastrophic effect'' on its polypropylene business, said North American PP marketing manager Mal Kaus.
``If a customer was ordering two rail cars [of resin] a month except for June and July, we would usually already see an order for two cars in August by now, but people are holding back on those orders,'' Kaus said. ``But we've made zero changes in our production because of the strike. That would be really premature.''
Kaus, who estimated 10 percent of Exxon's PP is sold into the auto market, said the timing of the strike has been fortunate so far.
``The strike hit just about the time that molders take a summer outage anyway,'' he said. ``That's lessened the impact some.''
Mehta added that planned plant turnarounds and maintenance work also are preventing the strike from having a greater impact than if it had occurred at a different time of year.
At Bayer Corp. in Pittsburgh, ABS product manager Bruce Kleinert said his business ``hasn't seen a rash of canceled orders,'' but has seen some orders booked for July moved to August instead.
``The major Tier 1 suppliers have hedged their bets a little bit, but if GM settles the strike, they want to be ready,'' Kleinert said. ``We're watching it closely, but with all our different grades and markets we have some flexibility with what we can do.''
He said a 3-5 percent increase in ABS exports has helped Bayer offset delayed automotive orders. In North America, ABS makers sell about 20-25 percent of their product into that market each year.
Existing business at nylon maker Solutia Inc. of St. Louis has not been affected much by the strike, but a spokesman said new business for new GM platforms has not materialized as expected.
Most resin executives contacted said their supply situations were in good shape as of late July, but they were not sure what would happen if the strike dragged on into the fall months.
Kleinert said: ``We're well-positioned right now with demand from other areas. But if we go further into September and October, times when we plan to be strong in Detroit because of new models starting up, we may have to take another look at our plans.''