By on April 14, 2012

A huge explosion in an industrial park in Marl, Germany, killed two. It also could bring the world’s auto industry to its knees “in the next few weeks,” writes Bloomberg.

The explosion destroyed production facilities of an obscure chemical called Cyclododecatriene. CDT is a key element of PA-12, a resin used in most fuel and brake-line coatings, flexible hoses and quick connectors supplied to automakers. A few days ago, TI Automotive of Auburn Hills, Michigan, wrote to customers:

“The shortage is real and immediate. The possibility of production interruptions at some of your facilities in the next few weeks is high.”

TI Automotive supplies brake and fuel lines, fuel tanks and pumps to all major automakers, including GM, Ford, Toyota, and Volkswagen. Its customer list reads like a who’s who of the auto industry.

Automakers are aware of the situation but have not reported any outages.

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30 Comments on “Factory Explosion Threatens World’s Car Industry...”


  • avatar
    daveainchina

    It’s somewhat amazing that such a large industry can have so many single points of failure in it’s supply chain.

    Makes you wonder where the other potential places are in the industry. Conversely it also makes you wonder why terrorists don’t follow these chains and target them. I’d argue they’d have a much higher potential for creating change if they can paralyze entire industries.

    Anyway I’m sorry about the loss of life and I hope that no one else was injured.

    • 0 avatar
      PenguinBoy

      “It’s somewhat amazing that such a large industry can have so many single points of failure in it’s supply chain.”
      Agreed. When I worked in (non-automotive) manufacturing, we used to regularly think about what might happen if a plant was taken out, and how we could restore production.

      It’s also odd that these single points of failure in the supply chain threaten not one but many automakers.

    • 0 avatar
      redav

      Nothing here indicates that they are the sole provider of this chemical. Just because everyone buys from them doesn’t mean they don’t buy from others as well.

      There will be no paralysis. Rather, it will be like the paint flecks produced in Japan that were no longer available after the earthquake. Ford and others simply restricted what they made/sold for a period by using inventory and offered alternates.

    • 0 avatar
      tresmonos

      Single point sourcing is rare. And you would be surprised how quickly a plant can get back on it’s feet after a major catastrophy. ‘Creating change’ is a sick, twisted and (in my opinion) incorrect view point. I think what you meant to say was, “provide an opportunity for a manufacturing team to overcome adversity.” It happens every day.

      It amazes me how many people worry about stuff like this. In general, people are inherently good. And for someone to have the required knowledge of an industry would require them to have extensive experience. Then they would have to shed all of their humanity and turn on their colleagues. All just to disrupt dealer inventory by 10 business days.

  • avatar
    Robert.Walter

    If the shortage persists, the supply of completed vehicles will act as somewhat of of a buffer. But, if I were an OEM (my children would have wheels, ha!) I would already be telling my supply base to prepare to stop production of all components excepting those destined for my fastest-moving highest-profit vehicle.

    Additionally, but with less chance of success, I would scramble to make sure that my suppliers committed thselves to the idea that any stock of this material on hand, or in their pipeline, was assigned to my production (this would be done over clauses agreed to in the PO and T&C.

    Assuming the supply of this material is constrained, one will soon begin to see which vehicles float the OEM boats, as production of all other vehicles in an OEMs portfolio will be quickly stopped to ensure material supply is concentrated and diverted to the high-profit runners.

    • 0 avatar
      mcs

      >> “hoovering up vast quantities of PA12 at inflated prices”

      “I just want to say one word to you. Just one word. Are you listening? Plastics.”

      • 0 avatar
        cannyfriar

        Hi mcs, no probs, I was listening. Plastics have always been around, even in 2007 when businesses everywhere were still booming. I haven’t the full background, but I think the solar business uses polyamide PA12 as a backing sheet for the photovoltaic panels; so lots of square kilometers in a recession-busting business. Helped by their business being subsidised, they can pay over the odds to secure the increasing quantities they need.

        The PA suppliers are happy to oblige and to start squeezing the auto suppliers out of PA12.

        The CDT supplier that blew up is not the only one but it is a very significant supplier of this specialist chemical, meaning that it certainly will affect supplier chains.

        The biggest issue won’t necessarily be obtaining alternative sources, but in validating them: with plastics, one man’s CDT is another’s poison in that they are delivered and processed slightly differently.

  • avatar
    cannyfriar

    Recently, other industries (especially solar, for some reason) have been hoovering up vast quantities of PA12 at inflated prices, forcing automotive suppliers to look for alternatives. These alternatives (including other types of polyamides that don’t need CDT) are just coming on stream, so I think there could have been a worse time than now – but it certainly sounds tight.

  • avatar
    johnhowington

    another attempt at drumming up new car sales.

  • avatar
    Astigmatism

    Looks like there may be a use for all of those Saabs stuck in Port of Newark after all.

    • 0 avatar
      Chocolatedeath

      Wow I did not realize they still had those in storage..I would love to have a loaded 95 at about 30 grand. Yes I do realize that they wont do that at all. They would rather to just have them sit there.

  • avatar
    gslippy

    Guess EVs are still available. Oh wait, they have brake lines, too.

  • avatar
    Detroit-X

    Gasp! New car shoppers will have to drive their cars three months longer before the trade-in. Unacceptable.

  • avatar
    lw

    I’m amazed this doesn’t happen more often. Redundancy is expensive. Having a single supplier make a basic component that is both needed by many and complicated/expensive to produce but easy to ship makes perfect sense.

    Also what’s the big deal? What if nobody in the world could buy a new car for a whole month? GASP!!!

  • avatar
    M.S. Smith

    “The shortage is real and immediate. The possibility of production interruptions at some of your facilities in the next few weeks is high.”

    Wow, there’s a chance that production might be slowed at some facilities at some point a few weeks from now. Sounds “real and immediate” to me!

  • avatar
    APaGttH

    [snark]

    Clearly this is another proof point of how awful the Chevrolet Volt is.

    [/snark]

  • avatar
    Robert.Walter

    Bertel says GM is “channel-stuffing”, GM says it was just planning ahead for such a contingency!

    I bet the boys in the Ren Cen are laughing at Toyota and Hyundai for keeping their inventory so low, saying “suckers!”

  • avatar

    Evonik Industries, a subsidiary of Degussa, is not the only maker of Cyclododecatriene. DuPont Nylon makes it in Victoria, Texas. One would think that the Bloomberg reporters would have at least thought to see if Degussa has any competitors.

    • 0 avatar
      highdesertcat

      Thank you for bringing that up. If you had not done so, I would have.

      I would further like to add that there are other (more expensive) resins available that do the same thing, although by far CDT in PA-12 is the least expensive way to go.

      And as for brake lines in cars, the resin used in aircraft brake lines is of a much higher grade and could, conceivably, also be used in brake lines for lowly cars and trucks.

      Yeah, it would be overkill since cars are not exposed to the same stresses as aircraft, but a shortage of CDT or PA-12 should have little, if any, affect on auto production.

      This is an alarmist opinion because production of cars will continue although we may see a slight increase in price if the cost of components using these resins goes up.

      • 0 avatar

        The Automotive Industry Action Group is having a summit Tuesday on the topic with TI and other suppliers who use CDT. It’s only a couple of miles from my house so if they allow media, maybe I’ll check it out.

      • 0 avatar
        golden2husky

        Maybe GM will go back to using steel for brake lines so they can rot out and blow st the most inopportune time. Luck for me it was in a driveway. Anybody out there with a GM W body that is 8 or so years older get underneath and check those lines, especially in the rear of the car. Mashing the pedal and having it it the floor is a scary and dangerous proposition. Zackman and Mikey, check your lines. This seems to be a very widespread issue, but no recall is coming. I wonder what would happened had I rear ended a minivan full of children…

  • avatar
    wallstreet

    Used car market will remain robust for a while.


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