DETROIT (April 30, 1:35 p.m. ET) — Automotive executives expect the industry to avoid shutdowns from the shortage of nylon 12, which is used in fuel and brake lines. But industry experts say it's not evident how severe the shortage is, and there's no guarantee the planned solutions will work.
The shortage stems from a March 31 explosion at Germany's Evonik Industries AG that killed two people. The incident decimated Evonik's production capabilities of cyclododecatriene, a key ingredient in nylon 12.
Evonik and other makers of nylon 12, France's Arkema SA and Switzerland's Ems-Chemie Holding AG, have since declared force majeure — a contract clause freeing the companies from supplying customers in the event of an unforeseen disaster — stopping nearly all production of the resin, sources say.
The industry responded with a series of emergency meetings. Then suppliers and automakers created a plan last week to quickly replace the resin.
Delphi Automotive plc CEO Rodney O'Neal told analysts and reporters during the supplier's quarterly conference call last week that any hiccups will be minimal.
“I don't see this is an issue for Delphi, and as we've interfaced with other suppliers and [automakers], I think that is the same across the globe,” he said. “The industry was tremendously flexible and fast at addressing this, so I don't see this as a crisis in terms of tremendous downtime at all for anyone around the world.”
Troy, Mich.-based Delphi used nylon 12 in a small number of parts and has already lined up substitutes, according to reports.
General Motors Co., Chrysler Group LLC, BorgWarner Inc. and others responded similarly.
Auto executives, meeting at the Southfield, Mich., headquarters of Automotive Industry Action Group, will finalize testing for its alternative materials plan today.
However, J. Scot Sharland, executive director of AIAG, said it's too soon to declare victory over the shortage.
The materials will require at least three weeks of validation testing before implementation, he said.
“They have identified these materials and are working on an orderly transition,” he said. “But there's no guarantee they are going to pass these tests.”
Dave Andrea, senior vice president, industry analysis and economics of Troy, Mich.-based Original Equipment Suppliers Association, said it's also not clear whether current molding equipment is capable of transitioning to the new properties of the alternative resins.
“Each resin has different properties, and we don't know what the processes are,” he said. “There's still a lot of discovery going on.”
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