Car Industry Picks Up Steam, Runs Out Of Parts

by Bertel Schmitt

January 31st, 2011 4:00 AM

car industry picks up steam runs out of parts

Today, none of the 50,000 workers employed at Volkswagen’s Wolfsburg plant have to punch in at work. The factory is waiting for parts. You may think that is their good or tough luck.

Not so, says Dan Sharkey, a Detroit lawyer who counts many auto suppliers as his clients. The shortages affect us all. Parts shortages are “”beyond a trend; it’s an epidemic,” Sharkey told Automotive News [sub]. These shortages are stopping assembly lines around the world, just when demand is beginning to pick up.

Here is a current snapshot, taken by Automotive News:

Chrysler Group expects to idle its Windsor, Ontario, minivan plant for at least a week because of missing parts.
Ford is reopening the Detroit plant that builds the F-series pickup after a weeklong shutdown. Reason: Missing parts for V-6 engines.
On Friday, Ford closed its Kentucky Truck plant because of a parts shortage.

From Germany, Bloomberg reports that BMW and Daimler are “left with little wiggle room,” although no plant closures are planned –yet.

Wherever you turn, the situation is the same: Carmageddon has wiped out many suppliers. Surviving “suppliers who cut capacity to the bone during the downturn either can’t ramp up quickly enough or are gun-shy about adding equipment and workers amid the fragile recovery,” Automotive News says.

Electronic parts are especially tight. For many electronic component manufacturers, the autoparts industry is a small part of their business, said Lars Holmqvist, CEO of CLEPA, the European auto supplier association. “When the crisis came in 2008-09, they didn’t believe in the auto industry any more and closed some plants,” Holmqvist said. “They are not keen to jump back in.”

Suppliers who are keen to jump back in face another shortage: Money. “The banks are still very cold” says Holmqvist. In a way, the industry is becoming a victim of its own hype.

“We have started the decline of the combustion engine and that will kill companies,” Holmqvist told Bloomberg. The banks don’t want to invest into what is perceived as aging technologies.

Would you have expected that you have to wait in line for your F-150, because the headlines say that electric cars are the future?

#BertelSchmitt #PartsShortages #Suppliers

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3 of 10 comments

Carlson Fan on Jan 31, 2011

"This is the downside to Just In Time manufacturing. JIT is only as efficient as its supply chain." I'd blame this on poor/lack of forecasting and/or plannning. With JIT you need the basics in place fot it to work(BOM & Inventory Accuracy for example). In otherwords you need to learn to walk before you can run.

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- Steve65 on Jan 31, 2011
  
  Oh come on. You obviously have some experience in the game, and you know that your forecast is only as good as your suppliers, carriers, and customs broker can manage. I have both been told "oh yeah, it's on the truck" (when it's still stuck in Customs) and had to tell customers the same thing. And then you have your Belgian factory manager who routes his stuff to Dallas instead of Miami (where the import broker is) because hey Dallas and El Paso are both in Texas, so it'll find it's way to the warehouse somehow.
  
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Dimwit on Jan 31, 2011

Not to mention that the weather all over has been quite a pip this winter. I don't see this as being a long term problem, just an aggravation.

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