An explosion and fire strikes a relatively small chemical plant in Germany, and the U.S. automotive industry has to scramble to avoid major shutdowns.
Is anyone else surprised by how global supply chains are so dependent on small links?
The nylon 12 shortage shaking the auto industry is just the latest example. We've seen similar stories the past few years.
Remember how Hurricane Katrina took out Procter & Gamble Co.'s Folgers Coffee plant east of New Orleans? The factory was out of commission for several months, and P&G ended up selling the business — and re-examining its strategy, to avoid sole-source suppliers. The decision ultimately contributed to the fall of a major packaging injection molder, Erie Plastics Corp.
Or how about last year's earthquake and tsunami in Japan? Automakers didn't fully realize how dependent they were on Renesas Electronics Corp., a maker of microcontrollers; and Merck KGaA, a paint pigment maker. Carmakers were forced to cancel orders, and it took some OEMs months to recover.
Now the nightmare is repeated, with nylon 12 in the leading role.
After a March 31 explosion and fire at an Evonik Industries AG plant in Marl, Germany, automakers realized they depend on a handful of suppliers of a fairly obscure resin grade that's critical to their business — it's used in fuel and brake lines.
The Marl plant made cyclododecatriene, a feedstock for laurolactam monomer, which is used to make nylon 12. Two companies — Evonik and Arkema SA — account for about half the world's supply of nylon 12, and Arkema buys cyclododecatriene from Evonik.
Sound like a potential problem yet? Then consider this: There was already a shortage of nylon 12 in the market, before the explosion. So it didn't take long to realize the situation is potentially serious.
Material suppliers stepped in last week to help, and some are offering potential replacements for nylon 12.
PN senior reporter Frank Esposito writes this week about some of the potential alternatives — nylon 6/10, 6/11, 6/12 and 10/10. Some or all could work, but there are significant differences in their properties, and automakers aren't about to make a quick decision.
As Jesse Snyder from Automotive News wrote last week, automakers don't substitute parts lightly, especially in primary safety systems. Snyder wrote: “No executive says, ‘This component must function under high pressure, intense vibration and temperature extremes for decades without a single failure causing fiery death, but if you say this substitute is just as good, that's fine with me.' ”
Validating parts made with nylon 12 alternatives could take months. Fortunately, suppliers say some testing was already under way. That could help speed up the process — at least automakers can focus more quickly on which materials have the best potential.
Meanwhile, automotive purchasing agents have learned — once again — the danger of depending too much on a small number of suppliers for a critical material. If purchasing agents in other sectors are smart, they're paying attention, too.
Loepp is editor of Plastics News and author of “The Plastics Blog.”