Resin shortage could disrupt auto production, report says

An explosion at a manufacturing plant in Germany is expected to cause a plastic resin shortage that could disrupt some U.S. auto production, according to an IHS Automotive report released Tuesday morning.

Auto industry leaders hosted a summit Tuesday in Southfield, Mich., to discuss the shortages of a component called CDT, a chemical that is critical to the production of a plastic resin called Nylon 12, which is used to make brake and fuel lines.

IHS projected that shortages of the obscure component are "likely to be serious." The March 31 explosion killed two at supplier Evonik Industries.

General Motors confirmed that some of its suppliers have been affected by the disruption, and other auto companies said they were assessing the situation.

Evonik and one of its customers, Arkema, whose Nylon 12 production has already been disrupted, account for about half of worldwide manufacturing capacity for the resin, IHS Chemical analyst Paul Blanchard said in a report. Blanchard projected that Evonik wouldn't regenerate production capacity for at least six months, leaving the auto industry scrambling to find substitute parts for a resin that was already in short supply.

"The ability of Evonik and Arkema to find alternate sources of CDT is very limited, and it is doubtful that the CDT shortage can be made up," Blanchard said. "In the short term, auto and truck production will be affected."

Automakers tried to identify possible substitute components at a one-day summit organized by TI Automotive and the Automotive Industry Action Group.

Some of GM's Tier One suppliers "have had exposure" to the plant explosion, spokeswoman Kelly Cusinato said in an email. She said it was too soon to project whether it would affect production plans.

"We have implemented a global work team, comprised of GM purchasing, engineering and suppliers, including Evonik, and are working to allocate and prioritize existing inventories and also find alternative process material solutions," she said.

Speaking to reporters at an event in California, Ford Motor CEO Alan Mulally said it was unclear whether the resin shortage would cause problems for the automaker.

"We're analyzing it right now," he said, calling the problem "pretty widespread."

Ford spokesman Todd Nissen said in an email that the automaker is monitoring the situation but has not yet experienced any disruptions.

Mike Goss, general manager of external affairs for Toyota Motor Engineering & Manufacturing North America, said the Japanese automaker is assessing the impact to its supply chain.

"Until the assessment is complete, we do not know if there will be an impact on production," Goss said in an email. "Our plants are operating normally, and we continue to monitor the situation."

Alisa Priddle and Greg Gardner of the Detroit Free Press contributed to this report.